Simulator How-To Guide: Buying Options
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
A crossover involving a security's short-term moving average ...
A pattern on bar charts resembling a cup with a handle. The cup ...
A temporary recovery from a prolonged decline or bear market, ...
The difference between the highest current bid price among dealers ...
A catalyst in equity markets is a revelation or event that propels ...
The use of an additional indicator or indicators to substantiate ...
Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
"Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process ... Read Full Answer >>
The 'Rule of 72' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of ... Read Full Answer >>
All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision ... Read Full Answer >>
The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
You May Also Like