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closer look

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.

 

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.

 

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.

 

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 control some of the risks and manage cost, we don’t charge a commission to close out short options that trade for less than 5 cents. What to Know Before You Decide

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.

 

These are a few examples of option strategies provided by our in-house expert, Brian Overby, Senior Options Analyst. See all examples of options strategies

Covered call

 

The setup

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

 

View covered call strategy

Covered call

 

The setup

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

 

View covered call strategy

Protective put

 

The setup

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

 

View protective put strategy

Protective put

 

The setup

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

 

View protective put strategy

Cash-Secured put

 

The setup

  • 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

 

View cash-secured put strategy

Cash-Secured put

 

The setup

  • 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

 

View cash-secured put strategy

Short call spread

 

The setup

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

 

View short call spread strategy

Short call spread

 

The setup

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

 

View short call spread strategy

Short put spread

 

The setup

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

 

View short put strategy

Short put spread

 

The setup

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

 

View short put strategy

Long straddle
 

The setup

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

 

View long straddle strategy

Long straddle
 

The setup

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

 

View long straddle strategy

Short call

 

The setup

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

 

View short call strategy

Short call

 

The setup

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

 

View short call strategy

Short put

 

The setup

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

 

View short put strategy

Short put

 

The setup

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

 

View short put strategy

Short straddle

 

The setup

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

 

View short straddle strategy

Short straddle

 

The setup

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

 

View short straddle strategy

""
Get your head in the options game

 

Whether you're a beginner, expert trader or somewhere in between, take the time to learn all about options and find the best strategy that fits your experience, risk tolerance and goals.

 

View the Ally Invest Options Playbook

""

Get your head in the options game

 

Whether you're a beginner, expert trader or somewhere in between, take the time to learn all about options and find the best strategy that fits your experience, risk tolerance and goals.

 

View the Ally Invest Options Playbook

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.

Profit/loss graph

Crunch the numbers with our profit/loss calculator to understand more of a trade’s potential before placing it.

Probability calculator

This tool uses implied volatility to help you determine the likelihood of hitting your targets.

Options 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.

""

Anywhere access

Connect to the market from any device and make the most of any opportunity at home or on the move.

Profit/loss graph

Crunch the numbers with our profit/loss calculator to understand more of a trade’s potential before placing it.

Probability calculator

This tool uses implied volatility to help you determine the likelihood of hitting your targets.

Options 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.

Anywhere access

Connect to the market from any device and make the most of any opportunity at home or on the move.

You know a good opportunity when you see one.

When you’re all about options, keeping costs low counts.

COMMISSION

$0

+ 50¢ per contract fee

How we compare
10 Contracts Standard Pricing No account minimum
Ally Invest $0 commission fee + 50c per contract
Schwab $0 commission fee + 65c per contract
TD Ameritrade $0 commission fee + 65c per contract
Merrill Edge $6.95 commission fee + $0.75 per contract
Fidelity $0 commissions + $0.65c per contract

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