Learn How to Trade Options
Learn leading strategies used by professional trader every day.
Learning the Basics
If you want to buy a stock because you think that the stock is going to move up, you simply buy the stock at the existing stock price. If the stock price is 100 dollars, then you will buy the stock for 100 dollars.
Buying an option is more complicated. Buying a call option requires you anticipate not only the directional movement of the stock, but you will have to anticipate a target price ( called the strike price ) and the time you think it will take to get there ( called the expiration date ).
If the stock you are interested in is 100 dollars, you might think to yourself that the stock will reach 120 dollars in the next month. More on this later, but you might be considering buying a call option contract for a 115 dollar strike with a March expiration. It is very important to know that you will be profitable as long as you get the direction correct.