How Do I Buy Options on Charles Schwab?

Options investment platform and brokerage firm Charles Schwab provides investors with trading in call and put options on different underlying investments. You must first open a brokerage account with Charles Schwab to buy an option. You will receive an email from Schwab detailing how to fund your account.

You can select the Charles Schwab equity trading platform when you want to buy options. Buying options via the best stock broker can provide you with an opportunity to become a successful investor. Do you have any idea how to buy options on Charles Schwab? Keep reading to know more.

1. Log In to Your Charles Schwab Account

Log in to your Charles Schwab account.
If you don't have an account, click on Open an Account and follow the instructions.

2. Deposit Funds

Once you've opened your account, it's time to deposit funds.

Click on Deposit Funds from within your account profile page.
Select the type of payment method that applies (i.e., credit card or bank transfer).
Follow any additional instructions provided by Charles Schwab.

3. Choose the Type of Option (Calls or Puts)

The next step is to select the type of option you're interested in buying. While there are different types, the most common are calls and puts. You can buy or sell either call or put options, but not both at the same time.

4. Select the Expiration Date of the Options Contract

You can buy options that expire up to one year from today. The shortest duration available is one month. Choose from four different expiration dates:

Front month
Second month
Third month
Fourth month

5. Choose the Underlying Security for Your Options Trade

To execute a trade, you need to choose the Underlying Security. This can be a stock or an index. You can choose the underlying security based on your investment strategy and what you are looking for in terms of risk/reward characteristics.

6. How To Select the Appropriate Strike Price for Your Strategy

Selecting an appropriate strike price is essential in planning an options trade. Some factors that influence good choices when placing your order include:

If you expect a stock's price to move up or down in one year, it makes sense that buying at-the-money puts would be appropriate.
If you think a share's price should remain steady but want protection against downside risk while still maintaining some upside potential — buying out-of-the-money puts might make sense.

7. Choose the Number of Contracts To Buy

You need to choose the number of contracts to buy. You can buy options in lots of 100 shares, so one contract = 100 shares.

8. Confirm Your Trade and Place It

Once you're sure that everything is correct, click Place Order to confirm the trade and place it.

You will find a confirmation screen detailing the details of your order.

The price you paid or received for each contract.
The expiration date of each contract.
The underlying security for each contract.

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