Options are derivative contracts giving the holder the right (but not the obligation) to buy or sell an underlying asset at a specified price on or before a specific date. In Australia, options are available on ASX-listed shares (exchange-traded options, or ETOs) and on US markets via international brokers. Options trading involves significant complexity and risk, and is generally not suitable for inexperienced investors.
Important Risk Warning
Options can expire worthless (resulting in a 100% loss of the premium paid) or generate losses significantly larger than the initial investment (for short/written option positions). ASIC’s MoneySmart website recommends that investors understand the risks thoroughly before trading options. Options are not an appropriate starting point for new investors.
ASX Exchange-Traded Options (ETOs)
ASX exchange-traded options are available on major ASX-listed companies (BHP, CBA, CSL, ANZ, etc.) and some ETFs. They are standardised contracts, settled through the ASX Clearing Corporation.
Brokers Offering ASX Options
| Broker | ASX Options | Notes |
|---|---|---|
| CommSec | Yes | Available to approved clients; requires options trading approval |
| SelfWealth | No | Standard share trading only |
| Superhero | No | Standard share trading only |
| IG | Yes | ASX ETOs plus CFDs on shares |
| Saxo | Yes | ASX and international options |
| Interactive Brokers | Yes | Comprehensive global options |
CommSec is the most accessible ASX options broker for retail investors. Opening options trading requires a separate application and approval process — CommSec assesses investor experience and suitability.
ASX Options Fees (CommSec)
CommSec charges options brokerage as a percentage of the contract value (minimum fee applies). Full fee schedules are available on CommSec’s website. Options exercise also incurs the standard share brokerage fee.
US Options for Australian Investors
US equity options (on NYSE and NASDAQ stocks) are available through:
| Broker | US Options | Notes |
|---|---|---|
| Interactive Brokers | Yes | Comprehensive, low-cost, professional tools |
| Saxo | Yes | Multi-exchange options including US |
| IG | Limited | Some CFDs on options-linked products |
| Moomoo | Yes | US options via the Futu platform |
Interactive Brokers is the most widely used platform for Australian retail investors seeking professional-level US options trading. Its fee structure is competitive for active options traders (per-contract fees rather than percentage-based).
Key Options Concepts for Australian Investors
- Call option: Right to buy the underlying at the strike price
- Put option: Right to sell the underlying at the strike price
- Premium: The price paid for the option contract
- Strike price: The price at which the option can be exercised
- Expiry date: The date after which the option expires worthless if not exercised
- ITM/OTM/ATM: In the money / Out of the money / At the money — describes the relationship between strike price and current market price
Tax Treatment of Options in Australia
Options are generally treated as capital assets for CGT purposes. The ATO’s tax treatment of options depends on whether you are buying or writing options, and whether they expire, are exercised, or are sold. Options used in a business context may be treated differently. The ATO provides specific guidance on the tax treatment of options, and professional tax advice is recommended for active options traders.
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- CFD Trading Platforms Australia
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- Saxo Review
- CommSec Review
- Share Trading Platforms hub
Frequently Asked Questions
Can Australians trade US options? Yes, through international brokers accessible to Australians — most commonly Interactive Brokers, Saxo, or Moomoo. US options trading requires understanding US market conventions and tax obligations.
Do I need special approval to trade ASX options? Yes. Most Australian brokers require a separate application and suitability assessment before granting options trading access. This typically involves questions about experience, knowledge, and risk tolerance.
Are options suitable for beginners? No. Options are complex derivative instruments with risks including the total loss of the premium paid and, for written options, potentially unlimited losses. Beginners should focus on understanding shares and ETFs first.
This article provides general financial information only. Options trading involves significant risk and is not suitable for all investors. Past performance is not a reliable indicator of future results. For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.