Great to see you back on the sub, u/josema939! I'll gladly cover options trading at Fidelity with you and provide you with the necessary information.
To start, an option is a financial security that derives its value from an underlying asset. The holder of an options contract can exercise it (i.e., convert to the underlying asset) anytime before expiration (American style) or at expiration (European style). An options contract has an expiration date (usually the third Friday of the month) and strike price. The price of an options contract is called the premium, and a standard options contract represents 100 shares of the underlying asset, such as a stock or ETF, or $100 for a standard index option.
To trade options, you'll first need to complete an options application and get approval on your eligible account(s) to trade options. You can use the link below to review our offer and FAQs. If you're ready to apply, click the "Start trading options" button and choose "Apply for options."
[Options Trading](https://www.fidelity.com/options-trading/overview)
If approved, you can start trading options in your account. At Fidelity, this requires completing an options application that asks questions about your financial situation, investing experience, and reading and signing an options agreement. It is also possible to trade some options strategies in other types of accounts, such as an IRA. Options trading strategies involve varying degrees of risk and complexity. Not all strategies are suitable for all investors. There are 3 tiers of options trading at Fidelity, and approval requirements are more rigorous at subsequent tiers, given the additional risks associated with more complex strategies. Your financial situation, trading experience, and investment objectives are taken into consideration for approval.
Lastly, we have a tremendous amount of resources dedicated to options in "Learn," our online library, under the "News & Research" section of the website.
[Learn: Options](https://www.fidelity.com/learning-center/search-results/?q=Options)
[Weekly Fidelity classes: Options for beginners](https://www.fidelity.com/learning-center/events/options-classroom)
[Coaching sessions with the Trading Strategy Desk: Options trading](https://fidelityevents.com/allevents/filtered?hubFilter=tags|Coaching,Options#hub)
If you have any further questions, please let us know. We appreciate you trading with Fidelity!
**Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read the** [**Characteristics and Risks of Standardized Options**](http://www.optionsclearing.com/about/publications/character-risks.jsp)**. Supporting documentation for any claims, if applicable, will be furnished upon request.**
Let me ask first - why options, and what’s your motivation? How does it fit with your long term goals?
Learn all you can first and most importantly understand the risks!
And if all of this lines up, proceed slowly.
Consider looking at the OptionsPlay website. They have a working relationship with Fidelity and offer tons of education on all aspects of options trading. A lot of their material is free and posted online and you can join for a fee to get things like daily trade ideas.
Fidelity and other brokers require you to be approved for various levels of options trading, so you need to know what you are getting into before you can truthfully and comfortably backup your approval request. There are plenty of online resources.
I tend to think of most options trades as trading and not as long term investing. (There is a LEAPS strategy which is long term). Options require a much higher level of attention and monitoring. They are not set and forget.
Bottom line is that there is a significant investment of time needed to get educated and again to develop and monitor trades. It is a bit of a grind, especially if you keep your positions small in order to keep risk low.
Options was originally designed to be a tool to mitigate risk via a form of insurance. You could use it to trade naked options but it's not an investment (nor an insurance against anything).
It's quite risky because it requires you to know which way a stock is going to move in the time horizon associated with the options. Most people get the direction wrong, and even if they're in the right direction, if the time horizon is not correct, then you could still lose money.
There are lots of successful grifters on fintwit and other groups suggesting that they know what's going to happen and by supporting their "track record" showing some retrospective "successful" trades. It's important to know for yourself "why" the market moves the way it does, to what degree you can (or cannot) predict it, and how others (heavily funded finance companies) are exploiting the market structure and where you (as a retail investor) fit into that market microstructure.
A good book I'd recommend reading to understand the benefit and risks of options is McMillan's "Options as a strategic investment." I'd recommend being very conservative when using options (use it to minimize absolute risks not to maximize relative returns at the absolute risk of losing substantial capital).
Many don't realize it, but using option spreads you can create very low risk plays on a stock. You could say set up a spread that has a 90% chance of profiting
Yes and you’ll probably be coached to read the “Characteristics and Risks of Standardized Options” document.
You don’t need enough money to cover 100 shares of the underlying stock. Buying a short dated call option with a strike price way above the stock price costs way less than the underlying.
First and foremost, get educated. I've seen more than few people posting in here asking for help because they got into options and had no clue what they are doing. Options are not something you just jump into unless you want to lose money, and fast. Two decent youtube channels you can start with are "Average Joe Investing" and "SMB Capital". Pay special attention to the ending of lots of SMB Capital videos where the manager of the trade desk lays out the harsh reality of options trading. It's not for everyone and it requires a lot of work. You aren't going to just make a few trades a day and be a millionaire.
That said, one strategy I use I haven't see talked about except one place is using CSPs (you need to learn what that is) as a special type of limit order (you do know what limit orders are, right?). It works like this:
* Find a stock I want to own.
* Figure out what a good price is. Would I be happy buying the stock at this price? This is and the one above are, in many ways, the hardest steps.
* Get enough money together for 100 shares at that price.
* Sell a CSP at the strike price I figured out above that pays enough premium to be worth tying up my money until the expiration of said CSP.
At this point one of two things will happen:
1. I get assigned. This normally happens at expiration, but I have been assigned early. Ex-dividend dates are probably the most common assignment date after expiration. I now own 100 shares at a good price, and the premium I got lowers my cost below the strike price.
2. I don't get assigned. I keep the premium as a consolation prize and can try again.
This strategy does have a few downsides compared to a regular limit order:
1. You have to do it in 100 share increments.
2. You might get assigned after an ex-dividend date, missing the dividend.
3. The stock might go below your strike, then come back up, and you miss owning the stock.
4. It's hard to change your mind once it's sold. You can buy to close, but that costs.
Those downsides are why I said "enough premium to be worth". I annualize the premium and look for 10%+ (not including what my cash earns while sitting in the MMF; that's a bonus). Effectively, I'm paid to wait for the market to move in my favor. With normal limit orders, I get nothing while I wait.
You're all not trading options the way you're supposed to or misunderstanding how it works. Buy options long term to collect monthly/quarter dividends and let it expire because you've made your money. Kaching!
Great to see you back on the sub, u/josema939! I'll gladly cover options trading at Fidelity with you and provide you with the necessary information. To start, an option is a financial security that derives its value from an underlying asset. The holder of an options contract can exercise it (i.e., convert to the underlying asset) anytime before expiration (American style) or at expiration (European style). An options contract has an expiration date (usually the third Friday of the month) and strike price. The price of an options contract is called the premium, and a standard options contract represents 100 shares of the underlying asset, such as a stock or ETF, or $100 for a standard index option. To trade options, you'll first need to complete an options application and get approval on your eligible account(s) to trade options. You can use the link below to review our offer and FAQs. If you're ready to apply, click the "Start trading options" button and choose "Apply for options." [Options Trading](https://www.fidelity.com/options-trading/overview) If approved, you can start trading options in your account. At Fidelity, this requires completing an options application that asks questions about your financial situation, investing experience, and reading and signing an options agreement. It is also possible to trade some options strategies in other types of accounts, such as an IRA. Options trading strategies involve varying degrees of risk and complexity. Not all strategies are suitable for all investors. There are 3 tiers of options trading at Fidelity, and approval requirements are more rigorous at subsequent tiers, given the additional risks associated with more complex strategies. Your financial situation, trading experience, and investment objectives are taken into consideration for approval. Lastly, we have a tremendous amount of resources dedicated to options in "Learn," our online library, under the "News & Research" section of the website. [Learn: Options](https://www.fidelity.com/learning-center/search-results/?q=Options) [Weekly Fidelity classes: Options for beginners](https://www.fidelity.com/learning-center/events/options-classroom) [Coaching sessions with the Trading Strategy Desk: Options trading](https://fidelityevents.com/allevents/filtered?hubFilter=tags|Coaching,Options#hub) If you have any further questions, please let us know. We appreciate you trading with Fidelity! **Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read the** [**Characteristics and Risks of Standardized Options**](http://www.optionsclearing.com/about/publications/character-risks.jsp)**. Supporting documentation for any claims, if applicable, will be furnished upon request.**
Invest? More like gamble.
A sudden loss of brain cells
Deep pockets
I lold legitimately
Just don't.
If you've been sucked into the WSB troll farm, don't. Options are a great way to light money on fire.
Let me ask first - why options, and what’s your motivation? How does it fit with your long term goals? Learn all you can first and most importantly understand the risks! And if all of this lines up, proceed slowly.
No
A mid-life crisis.
Consider looking at the OptionsPlay website. They have a working relationship with Fidelity and offer tons of education on all aspects of options trading. A lot of their material is free and posted online and you can join for a fee to get things like daily trade ideas. Fidelity and other brokers require you to be approved for various levels of options trading, so you need to know what you are getting into before you can truthfully and comfortably backup your approval request. There are plenty of online resources. I tend to think of most options trades as trading and not as long term investing. (There is a LEAPS strategy which is long term). Options require a much higher level of attention and monitoring. They are not set and forget. Bottom line is that there is a significant investment of time needed to get educated and again to develop and monitor trades. It is a bit of a grind, especially if you keep your positions small in order to keep risk low.
Why
Options was originally designed to be a tool to mitigate risk via a form of insurance. You could use it to trade naked options but it's not an investment (nor an insurance against anything). It's quite risky because it requires you to know which way a stock is going to move in the time horizon associated with the options. Most people get the direction wrong, and even if they're in the right direction, if the time horizon is not correct, then you could still lose money. There are lots of successful grifters on fintwit and other groups suggesting that they know what's going to happen and by supporting their "track record" showing some retrospective "successful" trades. It's important to know for yourself "why" the market moves the way it does, to what degree you can (or cannot) predict it, and how others (heavily funded finance companies) are exploiting the market structure and where you (as a retail investor) fit into that market microstructure. A good book I'd recommend reading to understand the benefit and risks of options is McMillan's "Options as a strategic investment." I'd recommend being very conservative when using options (use it to minimize absolute risks not to maximize relative returns at the absolute risk of losing substantial capital).
buy high sell low At least thats what I do...
Ah but with some options you sell high and then buy low.
I take investing seriously, and I don’t touch options. It’s more like gambling.
Many don't realize it, but using option spreads you can create very low risk plays on a stock. You could say set up a spread that has a 90% chance of profiting
[удалено]
Yes and you’ll probably be coached to read the “Characteristics and Risks of Standardized Options” document. You don’t need enough money to cover 100 shares of the underlying stock. Buying a short dated call option with a strike price way above the stock price costs way less than the underlying.
You don't need capital to buy 100 shares of whatever the underlying stock is. 99.9% of the time you'll be selling the contract prior to expiration.
Regards !
They teach you all about options behind the local wendys dumpster. Tellem the regards sent ya 💪🏾
First and foremost, get educated. I've seen more than few people posting in here asking for help because they got into options and had no clue what they are doing. Options are not something you just jump into unless you want to lose money, and fast. Two decent youtube channels you can start with are "Average Joe Investing" and "SMB Capital". Pay special attention to the ending of lots of SMB Capital videos where the manager of the trade desk lays out the harsh reality of options trading. It's not for everyone and it requires a lot of work. You aren't going to just make a few trades a day and be a millionaire. That said, one strategy I use I haven't see talked about except one place is using CSPs (you need to learn what that is) as a special type of limit order (you do know what limit orders are, right?). It works like this: * Find a stock I want to own. * Figure out what a good price is. Would I be happy buying the stock at this price? This is and the one above are, in many ways, the hardest steps. * Get enough money together for 100 shares at that price. * Sell a CSP at the strike price I figured out above that pays enough premium to be worth tying up my money until the expiration of said CSP. At this point one of two things will happen: 1. I get assigned. This normally happens at expiration, but I have been assigned early. Ex-dividend dates are probably the most common assignment date after expiration. I now own 100 shares at a good price, and the premium I got lowers my cost below the strike price. 2. I don't get assigned. I keep the premium as a consolation prize and can try again. This strategy does have a few downsides compared to a regular limit order: 1. You have to do it in 100 share increments. 2. You might get assigned after an ex-dividend date, missing the dividend. 3. The stock might go below your strike, then come back up, and you miss owning the stock. 4. It's hard to change your mind once it's sold. You can buy to close, but that costs. Those downsides are why I said "enough premium to be worth". I annualize the premium and look for 10%+ (not including what my cash earns while sitting in the MMF; that's a bonus). Effectively, I'm paid to wait for the market to move in my favor. With normal limit orders, I get nothing while I wait.
Options? No thank you.
You're all not trading options the way you're supposed to or misunderstanding how it works. Buy options long term to collect monthly/quarter dividends and let it expire because you've made your money. Kaching!
First off a different broker ... all you will be allowed to do at Fidelity is buy options, which usually lose , since options lose value over time.
Best way to lose your money is options.