Barriers and vanilla options
Discover the different types of option you can access with IG, by opening an options trading account. Trade our innovative barrier options to take greater control over your risk. Or use our more traditional vanilla options to hedge your portfolio, take a position in quiet markets, and more.
Options are complex financial instruments and your capital is at risk. Losses may be extremely rapid.
Why trade options with IG?
Find the right product to suit your objectives, with both barrier and vanilla options available
Find leverage that works for you, with increased control over your risk
Discover opportunity whether markets are rising, falling or flat
Trade on timeframes to suit you, with daily, weekly, monthly and quarterly markets
Trade on an easy-to-use platform, with a clear interface developed specifically for options trading
Get peace of mind from our FTSE 250 listing, 40+ years’ experience and world-leading status
What are options?
Options are contracts that give you the right – but not the obligation – to buy or sell an underlying asset at a certain expiry date. They are a type of financial derivative that allow you to speculate on the future price of a financial market.
What types of options can I trade with IG?
You can trade two types of options with IG – barrier options and vanilla options. Both are available to trade on a range of forex pairs, indices and commodities, and both allow you to take a position whether a market is headed up or down in price. However, there are also key differences between the two and how they behave.
What are barrier options?
Barriers, or barrier options, are bought options that move one-for-one with the underlying market price. They automatically close – or get ‘knocked out’ – if that price reaches your chosen knock-out level.
What are vanilla options?
Vanilla options are options as described above – contracts that give you the right to buy or sell an asset at a certain price by a certain date. Their price is more complex than that of barriers, affected by a range of different factors.
How do I trade barrier options?
- Learn how barrier options work
- Develop a trading plan
- Open and fund an account
- Find an opportunity
- Place your first trade
How do I trade vanilla options?
- Find out what moves vanilla option prices
- Learn the difference between buying and selling
- Choose a trading strategy
- Create and fund an account
- Open your first position
What are the benefits of trading options?
Benefits of barrier options
Take greater control of your leverage by choosing your knock-out level and trade size.
The option price moves one-for-one with IG’s underlying price.1
Your option premium is equal to your total risk.
Benefits of vanilla options
Choose your strike, expiry and premium to take control of leverage when buying.
Trade a broader range of market conditions, even when markets are flat.
Choose your risk
Buying options is inherently limited-risk (though selling is not).
Open an options trading account in minutes
Fill in our simple online form
We’ll ask a few questions about your trading experience.
Get swift verification
We can usually verify your ID in just a few seconds.
Fund your account and trade
Or practise on a risk-free demo if you’d prefer.
What are the risks of trading options?
Your capital is at risk, and losses may be extremely rapid.
Selling risk is not limited
Selling vanilla options is not limited risk (though all retail accounts benefits from no-negative protection)
Vanilla options pricing is complicated and does not always move one-for-one with the underlying.
How much does options trading cost?
Opening a barriers & options account with IG is free, and there’s no obligation to fund or trade. You can also trade in smaller sizes for your first month trading options with us, while you get used to how things work. Find a breakdown of the types of costs you’ll incur for options trading below.
- Barrier options
- Vanilla options
When trading barriers, your total risk is the option premium multiplied by your trade size, and we take the full value at the opening of the position.
You’ll pay the following charges when you trade barrier options with IG:
- An option premium, incorporating the dealing spread – the difference between the bid and ask price - and the knock-out premium, the price for your knock-out level being guaranteed, but only if your knock-out level is hit
- A commission per lot
- A funding charge should you hold your position overnight
|Market||Number of individual markets||Minimum spread||Commission1||Max risk|
|Forex||14||0.6||0.1||100% of premium|
|Indices||11||0.4||0.1||100% of premium|
|Commodities||4||0.3||0.1||100% of premium|
You’re subject to the following charges when you trade vanilla options with IG:
- An option premium, incorporating the dealing spread – the difference between the bid and ask price. When you sell vanilla options, you receive this sum rather than pay it
- A commission per lot
Some things to remember:
- When selling a vanilla option, the premium is credited to your cash balance upfront, and you’ll pay a commission per lot
- Variation margin may be required if the underlying market moves against you before expiry
|Market||Number of individual markets||Minimum spread||Commission1||Max risk buying||Max risk selling|
|Forex||50||0.6||0.1||100% of premium||To be defined by trade|
|Indices||40||0.4||0.1||100% of premium||To be defined by trade|
|Commodities||11||0.3||0.1||100% of premium||To be defined by trade|
Options trading platform
Trade barrier and vanilla options on a cutting-edge interface, with our easy-to-use web platform.
You can also trade barrier and vanilla options on the move, with trading apps developed specifically for your device.
1 This is not the case when the knock-out premium changes. If the knock-out premium changes, the price of the knock-out will move by the amount the premium changes.