New to Option trading. Need Help in Placing my call order.?

Question

I want to Purchase a AAPL Call order to open but not sure how to place the order. Can someone walk me through this first process and in trying to make a small profit on this AAPL Hype. I not looking for a big money but just to see how it works and how my profit would look. I'm starting with 2k and hope it increase the number will increase as i continue to learn and buy. How would "YOU" do it and show me and show me how the order is places. thank for your help. :0P

Answer 1

I don't trade equities options (I trade futures options), but the premise is the same.

Let's say I was trading in S&P 500 stock index options. The S&P 500 is currently trading at 1414.85 and say I wanted to buy the March 07 1425 Call option which is trading at (bid 24, ask 26). I could do a market order (which is buy it at whatever the current price is when the order hits the follow). I would say, "This a day order to buy 1 March 07 1425 S&P 500 Call option at market". Meaning the order is only good for today and will fill the order at whatever the current price is.

If I want in on a limit order (at a specific price), I'd say "This is a good till cancelled Limit order to buy 1 March 07 1425 S&P500 Call Option at 24 or better with a stop loss order at 18". What you've just done is told them you want to buy at a specific price of 24 or better, the order is good until you cancel it and that if the price drops to 18, to sell it to cut your losses.

That's how I do it. It may not be the best way, but it works for me.

Answer 2

You go to an options broker and start an account to trade. You have to place some money with him in the Account. They will execute your order. If the order is executed with margin then you probably will have to worry about courtesey sales if you are a writer. Otherewise if the market goes down then they will replenish the losses from the account you maintain and some times will have courtesey sales meaning liquidating your position without your knowledge.