Today, we’re thrilled to announce another development milestone for Alpaca’s Broker and Trading API – offering options to our global community. This expansion underscores our mission to open financial services to everyone on the planet.
The excitement to offer options was reinforced to us through discussions with our global fintech partners and developer community. Over the past year, we received the regulatory approvals and diligently constructed our core brokerage systems from the ground up.
Last November, we launched a beta options program tailored for algo traders, inviting them to test our API and provide invaluable feedback. The response was incredible, with thousands expressing interest to join. Then, in early 2024, we continued to collaborate not only with these traders but also our global partners, ensuring that their feedback was carefully addressed and integrated into our offering today.
Most recently, attendees of Alpaca’s inaugural Partner Summit were exclusively invited to witness this exciting reveal firsthand.
Retail’s Appetite for Options
Options are a versatile asset for strategic hedging, speculation, and income generation. The incorporation of options into both Broker API and Trading API is a strategic response to the growing interest in these instruments and their pivotal role in diversified investment strategies.
In July 2023, the retail share of options trading reached 45% on the NYSE. This participation has remained consistent since its sharp ascent from the 2020 pandemic. According to NYSE, this growth has been attributed to preferences in “short-dated options to make bets on market direction” coupled with access to low-priced option contracts. Steven Poser, their Director of Research, ends his analysis by stating, “none of these trends appear to be in danger of reversing.”
With options, Alpaca simultaneously enables fintech organizations to tap into this active trader demographic and increase their asset class breadth.
New Asset Class, Same API
Partners can use our best in class APIs to ensure a fast integration process, reduced development costs and an easy to maintain code across multiple asset classes. Not only that, but you can continue to leverage Alpaca’s success and support teams for any inquiries that you might have.
Our initial Broker API offering will support fully disclosed partner relationships and Level 1 + 2 options. The account approval process will be automated, and partners will have visibility into a customer's approval process via SSE events. Recognizing the importance of customer control, partners can downgrade or even disable individual customers' options access via its API. Additionally, the orders, positions, activities, market data endpoints will be expanded to support options, and partners have the flexibility to leverage our own indicative pricing feed via Market Data API or use their own providers.
We’ve competitively priced our commercial options offering to foster collaborative growth with a similar service model. And this is just the beginning – stay tuned as we plan to include omnibus partner relationships and Level 3 options trading in the near future.
For Trading API, our community can still expect an easy-to-use and reliable service including: comprehensive asset classes, free real-time market data, and a paper testing environment.
Starting this week, developers and traders alike can buy, sell, and exercise options via API or their dashboard. The best part? Options trading is commission-free for retail investors with Trading API.
Let’s Get Started
If you're new to Alpaca’s Broker API, speak with our sales team to explore how options can be easily integrated into your existing financial services. It offers modern architecture, support for real-time events, and access to robust technology that powers some of the most demanding algorithmic traders in the world. A sandbox environment can be created for your organization, allowing you to build and test extensively.
Our existing partners can also work with their success team to pursue this exciting opportunity and further expand their asset classes.
Retail investors can trade options commission-free by signing up for a free Trading API account today. Additionally, those interested in learning more about how to build their options algorithms can read our docs here.
Options trading is not suitable for all investors due to its inherent high risk, which can potentially result in significant losses. Please read Characteristics and Risks of Standardized Options before investing in options.
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It is your responsibility to inform yourself of any applicable legal and regulatory restrictions and to ensure that your access and use of this information does not contravene any such restrictions and to observe all applicable laws and regulations of any relevant jurisdiction.
All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. There is no guarantee that any investment strategy will achieve its objectives. Please note that diversification does not assure a profit, or protect against loss. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.
Securities brokerage services are provided by Alpaca Securities LLC ("Alpaca Securities"), member FINRA/SIPC, a wholly-owned subsidiary of AlpacaDB, Inc. Technology and services are offered by AlpacaDB, Inc.
This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Alpaca Securities is not registered or licensed, as applicable.
