Disclaimer
I am not a financial advisor. Any content on this document is for educational
purposes only. Always do your own research. Futures, stocks and options
trading involves substantial risk of loss and is not suitable for every investor. The
valuation of futures, stocks and options may fluctuate, and, as a result, investors
may lose more than their original investment. All trading strategies are used at
your own risk.
Message me on instagram if you have any questions
Oscar Martinez
@Lifeofvexcite
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@B
uellerTrades
Options trading in a nut shell
There are two sides to options trading.
Calls P
uts
This is when you believe the price of a This is when you believe the price of a
stock is going to go up. Also, “Bull” stock is going to go down. Also,
or “Bullish” refers to CALLS. “Bear” or “Bearish” reffers to P
UTS.
Think of it like this, a bull is the Think of it like this, a bear is the
mascot for Calls mascot for Puts
Bull= Going up Bear= Going down
Calls= Going up Puts= Going down
Options trading in all honestly is like gambling. But, with options
trading you can learn to minimize risk where as in gambling you’re
playing with luck.
I Say it’s like gambling because you’re “betting” for the price of a
stock to hit and/or pass a certain price point (calls) or you can “bet”
for the price to go below a certain price point (puts).
A strike is the certain price point you want the stock to hit in order
for you to make money.
Now when you purchase a “Bet” you’re actually purchasing what
is called a contract and within that contract you are to choose a
expiration date as to when the stock has to hit that price and after
that expiration date, you cash out if your contract hit the strike.
Example:
STOCK: ABC
CURRENT PRICE: $48.00
TODAYS DATE: APRIL 24 2020
CALLS PUTS
LAST BID ASK EXP STRIKE BID ASK LAST
1.00 1.25 1.00 May 1 50 1.00 .90 .90
2020
Bid is the highest price a buyer is currently offering for the contract
Ask is the lowest price a seller is offering for the contract
Last is the price of the most recent transaction for the contract
The decimals you see in the table are the prices of the contract. To
determine the actual price of the contract, you multiply the decimal
shown by 100. It’s a rule that needs to be followed to determine the
actual price. But whatever platform you’re on will tell you the actual
price before you buy so dont worry. Just know to multiply the
decimals by 100.
So after doing my analysis, I believe the Price of the stock ABC will
be at or above $
50 by MAY 1st 2020.
I will purchase a CALL with an expiration date of May 1st 2020 with
strike of $
50.
Let’s purchase
STOCK: ABC
CURRENT PRICE: $48.00
TODAYS DATE: APRIL 24 2020
CALLS PUTS
LAST BID ASK EXP STRIKE BID ASK LAST
1.00 1.25 1.00 May 1 50 1.00 .90 .90
2020
First, I’ll jump over to the C
alls section of the chart because I think the price is going
to go up.
Second, I’ll make sure my STRIKE is 50 because my price point is $
50.00
Third, I’ll make sure my E XP DATE is set for M
AY 1st 2020 because thats how much
time I believe it will take for the stock price to reach it’s strike.
Lastly, I will select the 1
.00 in the ASK row stating I will pay $
100 for the contract
(1.00x100=100)
What you have now
After confirming your order, you now have an active call that states
ABC CALL @50 or better EXP MAY 1 2020 bought at 1.00
