How Do I Buy Options on TradeStation?

TradeStation makes buying options easy for beginners and advanced users. In this article, you will learn how to buy options with TradeStation, along with other important information.

What Is an Option?

An option is a type of security for traders that provides you with the right to buy and sell assets. These assets are known as stocks that investors can trade on a variety of futures and ETFs. In addition, there are two types of options, call and put.

About Call and Put Options

A trader can trade options by buying or selling them. Put and call options can be identified as contracts used by traders when buying and selling options. "A "put" or put option is a right to sell an asset at a predetermined price. A "call" or call option is a right to buy an asset at a predetermined price." Those who hold their options until their expiration date, whether buying or selling, have diverse rights and obligations. When buying options, you can choose to hold ownership of the stock.

Rights and Obligations for Buyers and Sellers

If an option you are trading will have value when it expires, you may be required to take certain actions. This means a buyer who enters a trade with calls doesn't have any obligations, but they do have rights. Just as a seller who enters a trade with calls can be provided with an obligation to offer long shares. However, with puts, buyers can sell short but aren't obligated to do so, whereas sellers may have an obligation assigned to provide short shares.

How Price Option or Premium Option Contracts Are Determined

Generally, options contracts represent 100 stock shares each. The determining factors for premium or price options contracts include:

• The contract's expiration date.
• Volatility.
• The underlying stock price.
• Stock dividends and stock interest rates are at a lower degree (when applicable).
• The contracts strike prices for buying stock or selling stock.
• The stock option per-share price or a quoted price.
• Economic or similar news events can also significantly affect the price.

Using the Option Chains Panel to Trade

The Option Chains Panel can be found in the Options section. This section contains options and spreads available for trade. To access this section, click Options in Option Station Pro.

In this section, you will find a variety of ways to trade, including the following:

• You can buy a put option or a call option by clicking the price next to the strike.
• You can sell a put option or a call option by clicking the bid price next to the strike.
• You can buy or sell by right-clicking on ask or bid and choosing buy or sell.
• Choose a trade from the click-to menu and hold the Ctrl key down while clicking the option for the intended strike. This allows traders to build up to a four-leg spread.
• Hold down the position quantity button to roll a position and drop it into the proper strike position column.

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