1. Simulator How-To Guide: Introduction
  2. Simulator How-To Guide: The User Interface Tabs
  3. Simulator How-To Guide: Purchasing Stocks
  4. Simulator How-To Guide: The Portfolio Summary Page
  5. Simulator How-To Guide: Ticker Symbol Look Up
  6. Simulator How-To Guide: Stock Quote Information
  7. Simulator How-To Guide: Diversified Portfolio
  8. Simulator How-To Guide: Selling Stocks
  9. Simulator How-To Guide: Advanced Trade Types
  10. Simulator How-To Guide: Short Selling
  11. Simulator How-To Guide: Covering Short Positions
  12. Simulator How-To Guide: Cancelling Orders
  13. Simulator How-To Guide: Margin Accounts
  14. Simulator How-To Guide: Buying Options
  15. Simulator How-To Guide: Options Usage
  16. Simulator How-To Guide: Conclusion

Trading options is a bit more complicated than trading stocks. This section will guide you through the process.

Similar to buying stock, you must first click on the "trading tab" near the top of the screen.

You must now click on the "Trade Option" link that appears on the space directly below the tab menus.

Enter the stock symbol for the company you wish to buy the options on. For example if you want to buy options on Microsoft, enter "MSFT". Hit the "Get Quote" button afterwards.

Now you should have an option chain similar to the one below. Select the expiry month that you wish to trade the option in, and then click on the highlighted symbol that corresponds with the strike price you wish to trade at. Call options are always listed on the top of the page, and put options on the bottom.

For example, in the option chain below, if you wanted to buy a March 2008 call option on MSFT with a strike price of 34.00, then you would click on MSQ CL. Notice that the last trade of this particular option is quoted at 0.02 per option.

Notice that the ticker symbol, expiry, strike, and type of option are already entered in for you. Just enter the number of contracts you wish to buy (we selected 1 contract; 1 contract equals 100 options) and click "Preview order".

Take a look at the Preview Order page. Since you can only purchase options in contracts (where 1 contract represents 100 options), the total price of 1 option contract of MSQ CL, is $23.74 (the options cost $2.00 ($0.02/option x 1 contract x 100 options/contract)) and a commission of $21.74). If everything looks good, then click on the "Submit Trade" button.

As long as there isn't any problem with the trade, your order will be executed and the option will be placed in your portfolio in around 20 minutes (or at the beginning of the next trading day, if the trade was submitted after trading hours).
Simulator How-To Guide: Options Usage

Related Articles
  1. Trading

    Google Stock Too Expensive For You? Try Options

    Investing in Google (GOOG) generally requires you to pay the price of the share multiplied by the number of shares bought. An alternative using lesser capital involves using options.
  2. Trading

    Getting Acquainted With Options Trading

    Learn more about stock options, including some basic terminology and the source of profits.
  3. Trading

    Stock Options: What's Price Got To Do With It?

    A thorough understanding of risk is essential in options trading. So is knowing the factors that affect option price.
  4. Trading

    Trading Options on Futures Contracts

    Futures contracts are available for all sorts of financial products, from equity indexes to precious metals. Trading options based on futures means buying call or put options based on the direction ...
  5. Trading

    Exploring The World Of Exotic Options

    Exotic options provide investors with new alternatives to manage their portfolio risks and speculate on various market opportunities. The pricing for such instruments is considerably complex, ...
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center