Trade Options on Webull

Trade Options on Webull Financial LLC is registered with and regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is also a member of the SIPC, which protects (up to $500,000, which includes a $250,000 limit for cash) against the loss of cash and securities held by a customer at a financially-troubled SIPC-member brokerage firm

Why trade options on Webull?

  • 0 Commissions

  • 0 Contract Fees

  • 0 Assignment or Exercise Fees

Why trade options?

Flexibility

Options allow you to take advantage of both sides of the market. If you believe a stock is going up, you can buy calls and if you believe it is going down you can buy puts. Allowing you to capitalize in any market condition. Buying options do carry the risk of losing your initial investment if closed at a loss or expires worthless.

Leverage

Leverage allows you to gain more exposure with less money. Each option contract is worth 100 shares of underlying security. Thereby you control a lot more assets with a small investment amount. If the option does not reach the required price by expiration though the option will expire worthless, which means you lose the premium paid.

Hedging

Investors hedge to reduce risk. By purchasing put options you can hedge a portfolio or individual position using various strategies. This hedge effectively protects your underlying stock position for a specific timeframe.

Income Generation

One of the most popular use of options is to generate income. If you hold 100 shares of XYZ and you believe the stock is not going to move, you can sell calls against the position to generate income from option premiums. Subsequently, closing positions at a lower price will result in a loss and underlying positions can be called if assignment occurs.

What are options?

What are options and how do you trade them… An option is a contract to buy or sell a stock, usually 100 shares of the stock per contract, at a pre-negotiated price (also called the “strike price”) and by a certain date (also called the “exercise date”). Read on to learn how to trade options.
Elements in Options Trades
You must decide, in an options trade, the following:
 
  • Which direction is the stock going to move?
  • How high or low will the stock price move from its current price?
  • How will the stock move during a particular time frame?
 

Types of Options Trades

There are two types of options you can buy or sell: call option and a put option.
 
Call option
This option allows the buyer to buy the contract at the specified price on or before the expiry date and is exercised by the buyer when the market goes above the strike price. Within the call option, there are two possibilities:
 
  • Buy call: The buyer will buy the contract as it would yield maximum profits and limited loss, which is equivalent to the premium paid to the seller initially.
  • Sell call: It is the obligation of the seller to sell when the buyer exercises his/her call option.

 Put option

The buyer can sell the contract at the specified price when the market price moves below the strike price. Within the put option, there are a couple of possibilities:
 
  • Buy put: The buyer has the right to sell the contract when he/she thinks the prices will fall. He/she can sell the contract at his/her own will.
  • Sell put: The seller has the obligation to buy the contract. The seller enters in such a contract anticipating earnings.

Understand the Risks of Options Trading

Options can be purchased speculatively or as a hedge against losses. Speculative purchases allow for the potential to make a lot of money, but only if traders can correctly predict the magnitude, timing and direction of the underlying securities’ price movement. Doing this incorrectly can result in large losses and high trade commissions. Novice traders, beware.
 

Options Trading Terminology

  • Holder: A trader who has bought an option.
  • Writer: A trader who has sold an option.
  • Strike price: The price at which the asset will be bought or sold.
  • Expiration date: The already-agreed upon date by which the option owner must exercise his right to buy or sell the underlying security. After this date, the option expires.
  • In the money: The market price of the asset is higher than the strike price (in the case of a call) or lower than the strike price (in the case of a put).
  • Out of the money: The market price of the asset is lower than the strike price (in the case of a call) or higher than the strike (in the case of a put).

Trade Options on Webull —> Sign Up, Have Your Account approved, and deposit at least $1 and you will receive 2 FREE Stocks.

 

About Jonathon Walker 65 Articles
The Transparent Traders Blackbox 💸 Amazingly simple! "The TT Blackbox" runs off of multitude of custom coded algorithms and uses predictive A.I. to detect the most accurate day or swing trades that it calculates to give the best chance for success.

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