1. Home
  2. Learn To Trade Options

    Option trading may seem daunting, at first, but learning how to incorporate it into your investing or trading strategy, can boost your potential returns. Access to the flexibility that options afford, will give you a a very powerful quiver in your bow. The key is understanding how they work and how they may fit into your investing style. Than they can by used as a tool to enhance your portfolio's return.

    We have put together a vast amount of valuable resources, to help you get started learning about options on stocks. Start by reading our article on understanding options. Then read the articles that explain various aspects of options, in more detail. After that, look through our explanations of various types of option strategies. Understanding all these things combined, will help you maximize potential profits from options trading or investing.

    Option Basics

    These are the fundamentals you need to know, when first getting started trading options. How do I read option quotes. How do I place a trade? What is a put or call option? All these questions are answered, by reading the articles below.

    1. What Is An Option – In this section we go over the basics of what an option is. Read this first before moving on to the other sections.
    2. Strike Price – A strike price is the price at which the owner of an option can buy or sell the underlying.
    3. Expiration Date – The expiration date is the last day an owner of an options contract can buy or sell the underlying.
    4. What Is A Call Option – A call option gives the buyer the right to purchase a set amount of an underlying security, at a certain price, within a certain time frame. The seller of the call option has the obligation to deliver the underlying security at the stated price, within the time frame.
    5. What Is A Put Option – A put option gives the buyer the right to sell a set amount of an underlying security, at a certain price, within a certain time frame. the seller of the put option has the obligation to take possession of the underlying security at the stated price, within the time frame.
    6. Option Premium – The premium is the amount the buyer of an option pays the seller of an option.
    7. Option Quotes – Option quotes are usually listed by month, by strike. This is called the option chain.
    8. Option Order Types – There are three primary types of option order: Limit Order, Market Order and Stop Loss Order.
    9. Enter An Options Trade – Here are some basic steps to enter an options trade.

    Option Strategies

    There are an infinite amount of ways options on stocks can be used. We have grouped these strategies into bullish, bearish and volatility strategies.

    Bullish Option Strategies

    Bullish option strategies profit from a rise in the underlying price. This is known as having positive Delta.

    This is a list of bullish option strategies. These run the gamut. From conservative to risky trades.

    Here are some examples of bullish option strategies:
    1. Long Call
    2. Bull Call Spread
    3. Collar
    4. Call Backspread
    5. Bull Put Spread
    6. Strap
    7. Synthetic Long Underlying
    8. Covered Call
    9. Synthetic Long Call
    10. Short Put
    11. Stock Repair Strategy

    Bearish Option Strategies

    Bearish option strategies will profit when the price of the underlying goes down in price. This is negative Delta.

    We have compiled a list of bearish option strategies below. There are many different ways to take advantage in a fall in the price of a particular security. You need to assess what your risk level is for each trade. Then you can decide which one of these option strategies is best for you.

    1. Long Put
    2. Bear Put Spread
    3. Put Backspread
    4. Bear Call Spread
    5. Strip
    6. Synthetic Short Underlying
    7. Short Call
    8. Synthetic Long Put

    Volatility Option Strategies

    Volatility option spreads will profit when implied volatility rises or stays the same. The change in price as it relates to volatility is called Vega.

    Select a strategy from the list below. See if they fit into your trading style.

    1. Long Straddle
    2. Reverse Iron Condor
    3. Long Strangle
    4. Short Condor
    5. Short Straddle
    6. Iron Condor
    7. Short Strangle
    8. Long Call Calendar Spread
    9. Long Butterfly Spread
    10. Long Put Calendar Spread
    11. Call Ratio Spread
    12. Put Ratio Spread
    13. Iron Butterfly
    14. Long Condor