Options Trading: Step-by-Step Guide for Beginners
Options trading is complicated, but it’s not impossible to learn. Options are complex financial instruments which can yield big profits — or big losses. Here’s what you need to know about how to trade options cautiously.
What is options trading?
Options are contracts that give you the right to buy or sell a stock at a certain price by a certain date. Options trading means buying or selling these contracts, which have prices themselves, to try to make a profit.
For example, say you want to buy a stock that costs $100. If you think the stock is going to double to $200 within the next year, you could pay a small amount — likely less than $2 per contract — to buy an option to buy the stock for $120. If the stock does go to $200, you…
