Start to Trade

Description: Options, brokerage. options trading, margin requirements, trade, qqq, spy, options trading, stock

Placing an order for a stock is very similar to placing an options order. Call your brokerage firm and tell them which option you want to buy, if you use a live broker. Name the options symbol, the strike price, and provide the expiration date. Specify the number of contracts you would like to purchase, next. Decide on neither a specific price you are wiling to pay for the option (i.e., use a "limit order") or place your order "at market" (i.e., a "market order"), which means you will receive the best available price at the specific moment your order hits the trading floor, finally.

You will have to meet certain funding requirements before the brokers will accept your options order, with most brokers. You must have the necessary funds to cover any margin requirements, for example. Your broker will require you to open a margin account, to trade options. You will still be asked to trade on margin for example, even if you are not going to borrow money from your broker.

• The amount of money you must have in your account at the time you place an order, is the "Initial Margin Requirement". The funds must therefore be deposited into your account before any orders can be accepted;
• The "Maintenance Margin" is calculated as a minimum margin per outstanding contract; you must maintain that amount in your account in order to be able to hold an options position.

Your broker will send you several agreements, after you have met these margin requirements, among them the documents entitled "Characteristics and Risk of Standardized Options" and "Understanding Stock Options". If you have only just started to trade options, these texts are very useful.

You may place an order with your broker, after you have opened an account and met the margin requirements discussed above.