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 but need more knowledge and want to improve.

Steps To Follow While Trading Options

If you want to trade options, you must have an options trading account. Compared to a simple brokerage account for stock trading, an options trading account usually requires greater capital involvement.

1. Open an Options Trading Account

Besides, because of the higher complexity, brokers require more information about the trader (their income, liquid net worth, capital preservation or speculation, knowledge of investing, etc.) Therefore, an options trading account consists of a few more steps than a stock trading account.

After successfully opening the options trading account, you must decide on the type of options contract you want to enter. If you expect the market to increase, buy a call option or sell a put option.

2. Select The Options Contract

If the market goes down, sell a call option or buy a put option. However, you may sell a call or put option if the market is stable.

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. (Above for call options and below for put options.) So, predicting the correct strike price is extremely important.

3. Predict The Strike Price

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