Options Trading For Beginners - 4 Steps  To Follow

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Trading options involves purchasing and selling an underlying asset at a pre-determined price by a specified future date.

Before embarking on your trading journey, you should first understand what options are. We have written this guide for beginners who are eager to enter the world of options.

1

Open An Options Trading Account

Compared to a simple brokerage account for stock trading, an options trading account usually requires greater capital involvement.

2

Select The Options Contract

After successfully opening the options trading account, you must decide on the type of options contract you want  to enter.

3

Predict The Strike Price

An option contract is valuable only if the underlying stock price closes the option’s expiration period “in the money,” i.e., either above or below the strike price.

4

Predict The Option Time Frame

All options contracts have an expiry date, ranging from days to months to years. This period, too, cannot be conjured up from thin air.

Options Trading Benefits

- Greater Flexibility - Hedges Portfolio - Cost-effective

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