An Introduction to Put and Call Options
Learn what a call option is, what a put option is, and how to make money trading them. It's easier than you think!
This introduction to put and call options is written by an option trader with over 30 years experience and is full of option trading tips highlighting actual wins (and losses) from trading calls and puts.
Call option and put option trading is easier and can be more profitable than most people think. If you have never traded puts and calls before, then this website is designed for you. Not only is option trading easy to learn, but put and call option trading should be part of every investor's strategy.
This introduction to puts and calls provides all the definitions, explanations, examples, and real-life trading tips needed to help the beginner trader learn to trade put and call options successfully!
Put and call option trading provides an excellent way to lock in profits, maximize gains on short terms stock movements, reduce overall portfolio risk, and provide additional income streams. Best of all, trading calls and puts can be profitable in bull markets, bear markets, and sideways markets. If you are trading stocks but you are not using protective puts, buying calls, or if you have never sold a covered call option, then you are not making as much money as you can and you are missing out on some nice profits. The recent volatility in the stock market has provided unusually profitable opportunities. While stock traders generally dislike volatility, option traders love volatility because it's easier to make profitable trades when the markets are moving up and down every day.
Once the average investor has reached a comfort level trading stocks, then he should begin learning what put and call option trading is and how to trade them. Then, once he understands the basics and how to trade them successfully, then he should implement them in his regular trading and portfolio management strategy and watch his profits increase.
The beginning put and call option trader, however, often finds it difficult to transition from trading stocks to trading options. But trading options is easier than you might think--provided you start with learning the basics. This website is for exactly that: teaching you the basics of option trading.
Any successful trader should be implementing a strategy that includes both stocks and options. Why are puts and calls important? Trading them is important because they allow you to make more money than trading just stocks! There is a time for trading stocks and there is a time for trading puts and calls. But most of the time you should be trading all three: stocks, put options and call options. Keep reading through this website to learn the top 10 things you need to know before your start trading options.
Understanding put and call options is easy if you commit a little time to reading the following pages that describe calls and puts in a very clear and concise manner of definitions, examples, and my personal trading tips. As an experienced stock investor, option trader, and a life-long educator, I created this website to introduce and explain put and call option trading to the average investor.
If you don't have the basic understanding of option trading, however, it can also be very expensive. Because of the short life of options, profits and losses can add up quickly. The typical stock investor that starts trading calls and puts usually does not have a good understanding of the forces at work, they lose money on their first few trades, and then they throw their hands up in the air and say 'It's too confusing--never again.' Keep reading so this doesn't happen to you!
Put and call option trading is like everything else--you must commit a little time to understand the basics. Then once you start understanding it you will make some money at it. And once you start making a little money at it, then you will start enjoying it and look forward to the stock market opening every morning.
I have already helped thousands of people understand what a put and call option is and how to trade them. I have written this Introduction to Call Option and Put Option Trading to help you learn what calls and puts are, and to show you how easy it is to trade them.
If you read sequentially through the links in the Table of Contents on the top right side of this page, in less than 60 minutes you will have a very clear understanding of:
- What are stock options?
- What is call option?
- What is a put option?
- My Top 10 Option Trading Tips
- Option value and pricing
- How to buy a call option
- Who is the Best Option Broker
- and How to write a covered call option
I made my first call option trade in 1985 and have been trading calls & puts ever since. I have an MBA in Finance, I have read dozens of the best books on put and call option trading, I have subscribed to several of the best options newsletters, I have used many of the best discount option brokers websites, and I have made thousands of puts and calls trades in my lifetime.
Now, with this website, I am going to share with you all of my 27 years of experience trading calls and puts, of looking for the best calls and puts, of knowing when to take profits and when to let them run, and unfortunately for me but good for you, I will also show you some of the biggest option trading mistakes I made.
Getting Started Trading OptionsFirst of all, let's talk about what you need to start trading options:
- You need to read all the way through the Table of Contents on this web site
- You need to practice trading options on the best virtual stock and option trading platform available, one that is used by over 1,000 university Finance professors. Register for Stock-Trak Global Portfolio Simulations.
- You need to open a discount brokerage account, so chose from my recommended list of best option brokers .
- You don't need a lot of money, but you need at least $1,000 to get started.
- You need to have an idea about the future direction of a stock or index.
- You need to be able to do just a little bit of math.
If you can do these things, then you have what it takes to make your first call option trade.