If you’re looking to trade options, one of the best brokers to use is E*TRADE. E*TRADE offers various trading tools that make it easy to trade options, or other assets, including stocks, futures, and mutual funds. This article will show you how to trade options with E*TRADE.
E*TRADE is the pioneer of online trading for retail investors and part of Morgan Stanley, a leading global financial services firm. Its mission is to provide the tools and resources to empower the self-directed investor. They were established in the early ‘80s when a physicist and inventor developed a process to place a trade online for retail investors. This became the first online transaction sent to an exchange, and it paved the way for all leading street investors to control their investments online without needing a human broker.
Today, E*TRADE specializes in a first-class experience for the digitally inclined investor and trader. They offer competitive pricing, cutting-edge technology, and outstanding customer service.
How to Trade With E*TRADE
To set up your E*TRADE account, you’ll need:
- Your residential address
- Your date of birth
- Your Social Security number or Employment Identification Number
- The contact information of your current employer (if applicable)
- The information on the bank account you’ll use to fund your E*TRADE account (you can always set this up later)
Step 1: Open An Account With E*TRADE
You’ll need to open an account with E*TRADE to trade options with them. You can visit their website and fill out the online form.
To start the application process, go to this page and select an individual account. You’ll also need to specify whether or not you’re a new E*TRADE customer. If you’re not a current customer, you’ll enter your first and last name and email address at the bottom of the page. If you’re already a customer, just enter your user ID and password for the site.
Once you’ve filled out these questions, click “continue” and head to the next page.
Step 2: Choose The Type of Asset You Want to Trade
When you log in to your E*TRADE account, you’ll see a list of different financial assets you can trade. These include stocks, ETFs, and tools for forex trading and futures trading. For this example, we’ll choose to trade a stock option.
There are a few different types of stock options that you can trade with E*TRADE. The most common type is the call option. A call option gives the buyer the right, but not the obligation, to purchase a certain number of shares of a stock at a predetermined price (the strike price) within a certain period.
Another type of option is the put option. A put option gives the buyer the right, but not the obligation, to sell a certain number of shares of a stock at a predetermined price (the strike price) within a specific time.
As mentioned, you can also trade options contracts based on underlying assets other than stocks, such as ETFs or forex pairs.
Step 3: Enter the Details of Your Trade
Once you’ve chosen the type of option you want to trade, you’ll need to enter more details about your trade.
You’ll need to choose the stock you want to trade options on – such as SPY or APPL.
Next, you’ll need to choose the expiration date for your options contract. The expiration date is when the contract expires and is no longer valid.
Finally, you’ll need to choose the strike price. The strike price is the price at which the option contract can be exercised.
Step 4: Place Your Trade
Once you’ve entered all the trade details, you can place your trade by clicking on the “buy” or “sell” button.
If you’re buying a call option, you’re betting that the underlying asset’s price will go up. If you’re buying a put option, you’re betting that the underlying asset’s price will go down.
If you’re selling a call option, you’re betting that the underlying asset’s price will go down. If you sell a put option, you’re betting that the underlying asset’s price will go up.
Once you’ve placed your trade, all you need to do is wait for the expiration date. If your prediction was correct, you’ll make a profit. If your prediction was incorrect, you’ll lose money.
Step 5: Close Your Position When You’re Ready
Once you’ve reached the expiration date, you can close your position by placing a trade in the opposite direction.
If you’re long a call option, you would place a trade to sell the same number of contracts at the same strike price. If you’re short a call option, you would place a trade to buy the same number of contracts at the same strike price.
If you’re long a put option, you would place a trade to buy the same number of contracts at the same strike price. If you’re short a put option, you would place a trade to sell the same number of contracts at the same strike price.
Once you’ve closed your position, you will have realized your profit or loss on the trade.
This is an essential guide on getting started trading options with Etrade. Please refer to the E*TRADE website for more detailed instructions or contact customer support.
E*TRADE Programs for Options Trading
The most basic program is the Options House platform, which is available to all E*TRADE customers. This platform provides a simplified interface for options trading and is ideal for beginners. For the most advanced traders, ETrade also offers the OptionsHouse Professional platform, which is designed for professional traders and includes all of the bells and whistles they need.
E*TRADE also has a program called Dimeback. If you’re an options trader, you can get 10% of your commissions back if you make ten or more commission-generating trades per month. Options include:
- Buying options
- Selling options
- Writing options
- Exercising options
To qualify, simply link your account to E*TRADE’s Active Trader Services. You’ll then automatically be enrolled in the program and start earning 10% back on your commissions.
Active Trader Services
Active Trader Services is a platform designed for active traders. It offers a variety of features, including:
- Streaming quotes
- Advanced charting tools
- Real-time news
- Direct market access
If you’re an active trader, you can start with Active Trader Services by linking your account to E*TRADE. You’ll then be able to access all of the features that Active Trader Services offer.
E*TRADE also offers several brokerage services and additional features, including:
Portfolio Margin: With portfolio margin, you can trade up to 4x leverage. This means you can take bigger positions with less capital for your trading and investment objectives.
Complex Options: Innovative trading technology and strategies for online brokers and traders who apply spreads, straddles, and butterflies.
Extended-Hours Trading: You can conduct options trades before and after the market closes with extended-hours trading.
Mobile Trading: Web trading platform and mobile trading apps for iPhone, iPad, and Android for stock trading and capital management.
E*TRADE Pro: Mobile trading platforms designed for active traders. It includes real-time quotes, advanced charting tools, and more.
Research and Education: Various research tools and educational resources, including market commentary, webinars, and more.
Customer Service: 24/7 customer service support for online brokers and stock market traders.
Summary: How to Trade Options With E*TRADE
E*trade is a great broker to use for options trading and capital management. They offer a variety of different platforms and tools that make it easy to trade options. The article explains how to trade options with Etrade, starting with choosing the type of asset you want to trade.
You then need to enter the details of your trade, including the stock you want to trade, the expiration date, and the strike price. Once your trade is placed, you must wait for the expiration date and close your position. If your prediction was correct, you’ll make a profit. If it was incorrect, you’ll lose money. So make sure you have a risk management plan in place.
To add, E*TRADE is a web platform that offers a variety of tools that make it easy to trade options. Active traders can get started with Active Trader Services, which provides streaming quotes, advanced charting tools, real-time news, and direct market access. Other features available with Etrade include portfolio margin, complex options strategies, extended-hours trading, mobile trading, and more. Customer service is available 24/7.
Maurice Kenny has helped over 600 people learn other trading platforms and become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.
Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.
Also, download a (FREE E-BOOK) by Maurice Kenny, “DAY TRADE LIKE A MILLIONAIRE.”