Summary

Options are a great tool to generate income, hedge your risk or add leverage to your portfolio. Options strategies range from simple (like buying a call option when expecting a sharp price increase until the option expires) to complex (like multi-leg options).

In this article we will:

  • check whether Qtrade offers enough options markets for your needs
  • see if some competitors of Qtrade offer a better alternative through lower prices or more available markets
  • present some examples of fictional options trades
  • If you want to read our full review, including fees, deposit options and other platforms (like web and desktop) then skip to the Qtrade review.

Trade options at Qtrade
Can you trade options at Qtrade?

Yes, you can trade options at Qtrade.

Qtrade available options markets vs competitors
Qtrade RBC Direct Investing Questrade
Options markets (#) 2 2 6

Trade options at Qtrade
Fees for trading options at Qtrade

Let's take a closer look at the fees Qtrade charges and how much that is in USD for trading 10 options contracts. Note that some brokers use a model that doesn't charge a fee for closing an option trade. In these cases, in order to represent this discount properly, we've halved the actual opening fee for them, because most other brokers charge for both the opening and closing transactions. Note that some brokers have a charge if you get assigned stock or if you exercise your options.

Fees for transacting 10 options contracts at Qtrade vs competitors
Qtrade RBC Direct Investing Questrade
US stock options $17.0 $18.0 $20.0
US stock index options $17.0 $18.0 $20.0
UK stock index options - - -
German stock index options - - -

If none of the above brokers is a good match for you, we recommend reading our article about the best options trading platforms.

Trade options at Qtrade
An example of an option trade in a stock index

Let's have a look at how options on market indices can be used as a hedge.

Mrs Sleepwell has a diversified portfolio of US stocks that have done well in recent months. She doesn't want to sell them now, but at the same time she's afraid that a market downturn could cost her dearly. As a big chunk of her stocks are in the technology sector she decides to have some insurance by buying a put option in the NASDAQ index, with a strike price close to today's closing price. She chooses an option that will expire in 6 months. Until that time she'll be able to profit from the NASDAQ’s decline should it go lower, by selling her put option. As she thinks her individual stocks will correlate with the NASDAQ to some extent, with the option contract she was able to hedge her exposure to the markets somewhat.

Trade options at Qtrade
An example of an option trade in a stock

Let's have a look at how a handful of traders with different motivations can buy and sell options in the same individual equity.

Mr Chase really likes a recent hot stock called Hype, whose price has gone up from $10 to $14 in a very short time. Mr Chase thinks there might be still some juice left in it, but at the same time, he's afraid of a downward price correction. He doesn't want to miss a potential rally though, so he decides to buy a call option on the stock instead of buying it outright. He checks the so-called option chain of the stock and sees that the next option expiry is in 20 days. He thinks this window will give him enough time to profit if the stock extends its rally. He's buying the $15 call option, which gives him the right (but not the obligation) to buy the stock at the $15 price until expiry, irrespective of the actual price. The price of the option is the so-called premium, which is currently $0.90. He's buying one contract (10 options) for a total of $90 plus commission. After one week, the stock has risen to $16. Mr Chase's options have also increased in price and now he could sell them for $1.5 ($150 for one contract) but he decides to wait for an even better price. A week later, the stock falls to $13 and the options are now worth only $0.20 as there's only a little chance they would expire in the money. Mr Chase waits till expiry and the stock falls further to $10, which means the options in fact expire worthless. However, he has only lost the premium he paid.

Miss Bubbleburster on the other hand made a nice profit on Hype's crash. She didn't want to risk shorting the stock, but she wanted to bet on it falling so she bought a put option for $0.50 with a strike price of $13 when the stock was over $15. This gave her the option, but not the obligation, to sell the stock at $13. If she waited till expiry when the stock hit $10 she could have made a $3 profit on each option. However, when the stock price fell to $12 these put options increased in value to $1.65 and she sold them there.

Mr Haggle was on the other side of Miss Bubbleburster's first trade. He thought Hype's business was a good one and he wanted to own the stock eventually but thought the $15 price tag was excessive and was willing to wait for a better price. So he decided to sell a put option with a strike price of $13 and he collected a premium of $0.50 per option, so $50 for one contract. His idea was as follows: he will collect this premium regardless of the price of the stock. In case the stock is under $13 upon expiry, he'll need to buy the stock for $13, irrespective of the actual price. In the example above, this is exactly what happened. However, he's still much better off than if he had bought it at $15 instead of doing the option trade. Also note that when Hype first touched $16, Mr Haggle could have closed his trade buy buying for $0.10 one contract of the put he had sold previously. In this case, his net profit would have been 10 x ($0.50 - $0.10) =$40 minus the commission.

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Author of this article

Oskar Golebiowski

Author of this article

Oskar's goal is to bring transparency to investors in the Canadian stock brokerage market. With a bachelor’s degree in finance and over 3 years of business experience, Oskar has tested many different investing platforms in the past. His aim is to provide unbiased and honest reviews of the best tools available to Canadian investors.

Oskar Golebiowski

Canadian broker expert

Oskar's goal is to bring transparency to investors in the Canadian stock brokerage market. With a bachelor’s degree in finance and over 3 years of business experience, Oskar has tested many different investing platforms in the past. His aim is to provide unbiased and honest reviews of the best tools available to Canadian investors.

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology

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