Placing your first option trade is not as hard as it may seem. You'll never learn until you do it so let's walk through placing your first trade step by step right now.
At the end of this quick tutorial, add your comments and let me know if you think this was helpful in getting you started or not.
Step 1: Login To Your Brokerage Account
This assumes that you already have a great broker and can either login online or download a desktop application. Either way, to place a trade you need to get access to the market.
Step 2: Find The "Trade" or "Order" Page
Some brokers will have tabs or pages where all the orders are done. Find this page - it's probably very clearly labeled since they want you trading.
Step 3: Pull Up A Stock/ETF Quote
Type in a ticker symbol to pull up the live market quotes for the stock/ETF you would like to trade options on. In this example I'll just use AAPL for Apple Stock.
Step 4: Search For The Options Quote Table
Once the quotes start streaming in there will be both the "underlying" and "options" quotes. Choose the options.
Step 5: Choose Your Expiration Month
Now you have to select with month you want to trade; front month or near month. Front month options are the next month expire. In our case these would be March.
Step 6: Select Your Strike Price
Down the middle of the pricing table will be all the different strike prices for both Calls and Puts. Scroll down and choose the strike price that you want.
Step 7: Choose Either "Call" or "Put"
Typically the Calls will be listed on the left and the Puts on the right in the header. Find the side of the trade you want to be on and hit the bid/ask quotes to pull up the actual order form for the option. Remember that BID = Sell and ASK = Buy.
Step 8: Enter The Quantity
Simple enough right, just enter the number of contracts you want to trade.
Step 9: Set You Desired Price
Again set the price to what you want to pay for the option.
Step 10: Choose The Order Type
The order type is a more advanced feature which I've covered in other video tutorials. For our purposes we are going to use a LIMIT order which pegs the price we are willing to pay to the price we enter.
Step 11: DAY or GTC?
This will determine how long the order will stay open if it's not filled. Day orders clearly stay open just the day and automatically cancel at the market close. GTC orders are "Good Til Cancelled" meaning they will stay open and working until they are filled or you cancel it yourself.
Step 12: Confirm & Send!
The most important step by far - take 1 minute and go over your order again making sure that everything is correct. Make sure you are entering the right price and quantity. Just a little time checking your orders will save you thousands of dollars each year - trust me.
That's it - congratulations! You've now placed your first option trade. Now wasn't that easier than you thought?