Typically, option traders are self-directed investors, meaning they don’t work directly with a financial advisor to help manage their options trading portfolio. As a do-it-yourself (DIY) investor, you are in full control of your trading decisions and transactions.

While having complete control of your investments is desirable for some, it can also be very overwhelming for the beginner investor. That’s why we created this Whiteboard Video Series, featuring our “option guy,” Brian Overby, to help you get started.

What exactly is an option?

Options are contracts based on many different investment products. Some of them are based on stocks, ETFs, or indexes.

One of the more popular contracts is a stock option contract. Listed stock options that trade on exchanges like The New York Stock Exchange are very versatile products. They can be used to increase leverage on your capital or they could be used to protect your portfolio against a downward movement in the marketplace.

Bottom line is, no matter if you’re bullish, bearish, neutral, or just worried about where the market’s going next, listed stock options can be used to help you achieve your financial goals if your forecast is correct.

There are two flavors of options: calls and puts. Call options allow you to buy or call stock away from somebody at a predetermined price for a specific period of time. Put options are the exact opposite of call options. They allow you to sell or put stock to somebody at a predetermined price for a specific period of time.

The ability to fixate a buy (call) or sell (put) price on a stock inside your portfolio can allow you to sculpt your portfolio to match your forecast for the next week, month, or year for the marketplace.

Did You Know?

There are plenty of communities that bring traders together to discuss things like current market outlook and option trading strategies.

Listen to the latest episode of the Options Playbook Radio, watch our free, weekly Stock Play of the Play show covering stock market moves, or ask Brian Overby, our “option guy,” anything by emailing him directly.

Up Next: Option Trading: 8 Things to Know Before You Trade

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