Prop trading has been one of the retail trading success stories in recent years. The combination of a trading competition environment and low barriers to entry has captured the imagination of traders, particularly those in the Gen Z cohort.  

The industry was valued at $12 billion in 2025 and is projected to grow to $20 billion throughout 2026. As the formula for success in this growing niche is becoming clearer and more competition enters the space, prop firms are continuing to search for ways to expand their product offerings. The reason for this is to differentiate themselves while also attracting a wider contingent of traders to their services. 

One of the first expansions of this kind was into futures trading. The move to incorporate these exchange-traded markets over traditional OTC markets has lent the space an air of transparency, as futures have a single reference price compared to CFDs. 

Now, the next frontier for prop firms appears to be options markets, which have seen an influx of retail activity in the run-up, during, and after the pandemic. At their peak in 2022, retail traders accounted for 48% of overall options market activity. Participation has remained elevated ever since, with a flurry of options-related content on YouTube and other social media platforms making it easier for new options traders to be brought up to speed quickly, essentially at no cost. 

For these reasons, the idea of starting an options-focused prop firm in 2026, or adding options to an existing offering, is attracting many players as a potential recipe for outperforming the competition.  

Below, we will examine what interested firms need to be aware of when pursuing an expansion into prop options. We’ll cover the regulatory landscape, platform requirements, risk management, data, and competition software, as well as where Devexperts and our flagship DXtrade platform fit into the world of prop trading in general, and prop options specifically.  

Regulatory requirements 

Prop firm regulation remains opaque, with firms currently exempt from financial regulation. This is because trading takes place in a simulated environment, with traders paying a fee to participate in competitions.  

Despite this, regulators have been paying closer attention to how these firms operate. In the EU, financial regulators in Italy, Belgium, and Spain have raised concerns about the business model of retail prop trading. In Australia, ASIC has warned influencers about promoting prop trading without providing adequate risk disclosures. These include sharing high failure rates, similar to the disclosure required in marketing materials that CFD firms are obliged to provide.  

In the US, the CFTC is reviewing whether prop firms should be classified as Commodity Trading Advisors, which would significantly change how US-based prop firms operate. The regulator is also considering whether prop firms that offer futures and options should be required to register with the CFTC, regardless of whether trading is conducted in a simulated environment. Disclosure requirements for fees and payouts are also under consideration, as is the introduction of risk management and capital adequacy rules.  

We’re also seeing a focus on stricter KYC and AML requirements across the board in the prop trading space. The required details are the same as those of other trading venues, which are obliged to collect and may also include appropriateness tests before customers are permitted to trade. It’s likely that within the next 12 months, certain jurisdictions may require prop firms to register with them and/or attain licenses in order to be able to operate.   

Platform requirements 

Early on, the prop trading industry found its feet primarily by grey-labeling platforms from existing license holders. These were CFD offerings that could easily be run on demo platforms.   

However, as the industry moves towards other instruments such as futures and options, the dominance of incumbent platforms is being thrown into question. Prop firms in the market for a trading platform that fully supports options trading are now seeking platforms with native options trading functionality.  

The additional instrument-specific requirements, both in risk management and client-facing tools, are prompting prop firms to source platforms like DXtrade, which have a pedigree for supporting the needs of futures and options traders, as well as the venues that serve them.  

These requirements include the platform being aware of options “Greeks” (Delta, Gamma, Theta, Vega) and having continuous access to their calculations. Options Greeks are crucial for options traders. They’re the dashboard telemetry that clues them into the sensitivity of their positions to things like the changing price of the underlying, time decay, volatility, and interest rates. Other well-known platforms do not feature these readings in their standard setups.  

Similarly, options traders value platforms that can provide projections of how positions will be affected by changes in the Greeks variables above, as well as options strategy presets and the ability to combine strategies in multi-leg trades. 

Market data feeds 

Market data for options traders is more complex than just the underlying asset price feeds required by prop trading venues that offer challenges in CFD-like simulated environments. Prop trading of options requires live order book and volume data (there are no order books in CFD trading), as well as real bid/ask spreads (which are set and managed by the broker in CFDs). These data originate from regulated options exchanges like the CBOE and NYSE. 

Options brokers (whether prop or not) access these feeds via providers such as the Options Price Reporting Authority (OPRA). This body consolidates a host of options data across all options exchanges, including real-time bid/ask prices, trades, volume, order book depth, and contract-specific information like open interest and time to expiration.  

In addition to these feeds, traders require real-time prices and historical data on underlying assets to make informed trading decisions. As mentioned above, options trading also necessitates access to “Greeks” data as options pricing is incredibly sensitive to a host of factors. 

DXtrade benefits from these data out of the box via dxFeed, a provider of institutional-grade market data. dxFeed handles OPRA (and other) licenses, furnishing the DXtrade platform with real-time low-latency feeds and historical tick-by-tick data. dxFeed’s price engine calculates theoretical option prices on both real-time and historical data.

Risk management 

The non-linear nature of options trading requires that prop firms offering this instrument run competition and risk management logic that’s specifically tailored to options trading. Unlike spot markets, an options trader’s positions can shift from within margin requirements to underwater in an instant.  

This is known as “gamma risk.” If delta is understood as the change in an option’s price for a change in the underlying asset price, gamma measures the rate of that change. Traders of spot markets, and indeed the brokers that offer them, do not have to worry about gamma in this way. 

Prop options firms, like regular options brokers, must manage these increased risks. They do so by setting net delta limits and gamma limits when contracts are near their expiration dates. Firms also limit the net exposure their traders have to vega (implied volatility), especially in advance of high-profile market events like earnings announcements.  

Firms are required to monitor Greeks at both the portfolio and individual trade levels, which is a non-trivial addition to risk management practices compared to trading CFDs. Greek calculations must be updated continuously, and traders must keep track of these changes and adjust their hedging practices accordingly. Risk management logic must be able to set these limits and act on them automatically, liquidating positions as limits are breached.  

These types of firms must also be able to set both trailing drawdowns and static drawdowns, with the latter becoming more popular among prop options firms as it keeps traders disciplined and is a more conservative approach to risk management. DXtrade includes these functionalities in its offering, leveraging our extensive expertise in providing platforms for the professional real-money options market. 

Prop trading competition software 

One of the keys to running a successful prop firm is the easy integration of contest software into the trading platform. Contest management systems allow firms to set contest rules such as profit targets, drawdown limits, and exposure thresholds. They also provide real-time leaderboards with live performance updates to maintain engagement and further gamify the experience of taking part in trading challenges. These systems also support different contest designs, allow prize logic to be configured, and facilitate the automatic distribution of bonuses.  

As explained above, trading options comes with its own unique requirements, and competition software must also be able to manage the complexities and risks of prop options strategies. They are required to account for and enforce rules around Greeks, limits, position sizing, expiration exposure, and drawdowns.  

These systems must be able to seamlessly integrate with trading platforms for order routing, execution, and position management, both by the firm and its clients, which necessarily takes place on the platform. 

By licensing DXtrade, prop options firms benefit from a number of options-specific risk management capabilities that control what traders can and can’t do, while automatically monitoring adherence to competition rules and enforcing certain parameters such as maximum drawdowns and profit targets. The platform supports group management, custom trading-day schedules, and open-position auto-liquidation at session end, as well as functionality for both live and simulated execution. DXtrade enables easy integration with contest software via APIs, with many pre-built integrations that shorten time-to-market for prop firms.  

Conclusion 

In summary, now is a great time for firms looking to construct their own competitive prop options offering, whether this be a new entry into the space or the expansion of existing prop trading firms into the world of exchange-traded derivatives. Feel free to contact us for more information on getting started.