Simulator How-To Guide: Buying Options
  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

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

  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
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  4. Option Chain

    A form of quoting options prices through a list of all of the ...
  5. Exchange-Traded Option

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RELATED FAQS
  1. What do the phrases "sell to open", "buy to close", "buy to open", and "sell to close" ...

    The confusing terminology mentioned in the question deals with entering and exiting option orders. In review, there are two ... Read Answer >>
  2. What does high open interest tell you about an option?

    Learn about the open interest of options contracts and what a high and a low open interest indicate about the liquidity of ... Read Answer >>
  3. Does the seller (the writer) of an option determine the details of the option contract?

    The quick answer is yes and no. It all depends on where the option is traded. An option contract is an agreement between ... Read Answer >>
  4. How do I set a strike price for an option?

    Learn about the strike price of an option and how to set a strike price for call and put options depending on risk tolerance ... Read Answer >>
  5. What is the difference between open interest and volume?

    Learn more about options, what options' volume and open interest are and the difference between volume and open interest ... Read Answer >>
  6. What do all of the letters in a stock option ticker symbol mean?

    The option ticker explains four main things about the option: the underlying stock, whether it is a call or a put option, ... Read Answer >>
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