Options Trading

Take a closer look at options trading.

A little more knowledge goes a long way.

Why trade options?

This type of investment strategy has its advantages.

Options are contracts that give the owner the right to buy or sell an asset at a fixed price, called the strike price, for a specific period of time. The “asset” may be several kinds of underlying securities. Option trading is a way for investors to leverage assets and control some of the risks associated with playing the market. You can use options to protect gains, control large chunks of stock or cut losses with a relatively small cash outlay.

Opportunity to speculate using leverage.

This allows for strong potential returns as you can control an investment with a relatively small amount of money. Just be careful with this power, as it can also result in significant loss if your outlook is incorrect.

Hedging your position.

If you have an existing position in an underlying security, you can use options to lock in potential gains or minimize loss should things not go as you expected.

Flexibility with unique strategies.

There’s a wide variety of option strategies that can be performed on many types of underlying securities, like stocks, Indexes and ETFs. So whether your outlook is bullish, bearish or neutral, there’s a strategy that can work in your favor if your forecast is correct.

On the other hand, option trading can be complicated and risky, and some strategies may cause you to lose your entire investment or more. To help manage cost, we don’t charge a commission to close out short options that trade for less than 5 cents. Before trading options, review the Characteristics and Risks of Standardized Options brochure for more information.

Developing an approach.

There’s an option trading strategy for any skill level. When you invest on your own, you’re in full control of your trading decisions. It’s important to think about the effects that variables like implied volatility, the price of the security or time decay will have on your strategy.

Covered call

The set up

You own the stock Set a call
strike price A Generally
the stock price will be below strike A

Protective put

The set up

You own the stock
Buy a put, strike price A
Generally, the stock price will be above strike A

Cash-Secured put

The set up

Sell a put, strike price A
Keep enough cash on hand to buy the stock if the put is assigned
Generally, the stock price will be above strike A

Short call spread

The set up

Sell a call, strike Price A
Buy a call, strike price B
Generally, the stock will be below strike A

Short put spread

The set up

Buy a put, strike price A
Sell a put, strike price B
Generally, the stock will be above strike B

Long straddle

The set up

Buy a call, strike price A
Buy a put, strike price A
Generally, the stock price will be at strike A

Short Call

The set up

Sell a call, strike price A
Generally, the stock price will be below strike A

Short put

The set up

Sell a put, strike price A
Generally, the stock price will be above strike A

Short straddle

The set up

Sell a call, strike price A
Sell a put, strike price A
Generally, the stock price will be at strike A

Intelligent tools for the options investor.

We’d make a good team.

Our trading platform is designed to help you make more informed investing decisions from wherever you happen to be. You have everything you need to explore opportunities, gain insight, or take action whenever the mood strikes.

Option chains

Our intuitive display makes it easy to see what’s available and place trades.

Research and market data

Get market stats, news and detailed metrics on companies you’re interested in. You can also find company quotes, charts, high/low prices, dividend dates, news, peer performance comparisons and more.