Options

Options are contracts that give the buyer the right but not the obligation to buy or sell an underlying stock at a specified strike price on or before a specified date. The seller incurs a corresponding obligation to fulfill the transaction, which means that they must buy or sell the underlying stock if the owner elects to exercise the option, prior to the options expiration date. The buyer pays a premium to the seller for this right.

Options which give the buyer the right to buy a stock at a given price are called "calls" and options which give the buyer the right to sell a stock at a given price are called "puts". Both calls and puts are commonly traded.

Options are typically thought of as a higher risk type of investment that only very sophisticated traders should consider using; however, this is not necessarily the case. To trade options you need to open what’s called a “margin account” with a broker. And while it is true that you must be a little more financially able to open up such an account (usually a $5,000 minimum), there are many options strategies that are very low risk. Some are simple, some are relatively complex, and some options strategies are used to provide income on an ongoing basis.

Options provide very high leverage and as long as you do not abuse that leverage, trading options properly can be less risky than trading the underlying securities directly.

Options Trading Articles

To learn more about options trading, check out these free articles:



Advanced Options Programs

If you’re interested in more advanced training on options trading, we recommend you check out these programs:

  • Options Income Engine — Learn how to buy monthly call and put options with our unique filtering capability that automatically finds both the safest stocks and ETFs as well as the best options to trade. Trades are 4 to 6 weeks in duration, on average.


  • Options Profit Mastery 2.0 — If you want to truly master options trading, this is the most complete training program you’re likely to find. Just about every options strategy you’d ever need is covered, along with the ability to find the best trading candidates.


  • Instant Options Income — If the idea of having the potential to get an extra "paycheck" every Friday sounds appealing to you, this video advisory service will show you how it’s done by using credit spreads on weekly options. Trades are 1 week in duration.