Options trading are complex and to enter this segment of the market you should first be confident about trading stocks. When you purchase a stock you decide on the quantity of shares that you want to purchase and you can then place the order on a market or set a limit price. To trade options you need to know this as well many other strategies.
Before you start to trade options you need to open an options trading account. This options trading is complex and the capital required is also huge. This is why the broker will check your finances before letting you open an options trading account. The brokerage firms will also scrutinize your trading experience before they let you open an options account. You should also know the risks that are involved in options trading and the preparation that you need to trade in this asset class.
Before you start to trade into options a broker will give you a level to trade in. You need to know of the investment objectives like capital preservation, income and speculation. You also need to have some trading experience and knowledge about trading. Your trading experience and the number of and size of your trades are also taken into account. Your liquid net worth and any personal information and employment information could also be considered. You will also be asked about what kind of options you would be interested to trade in.
Based on this you get an initial level to trade in. Also important is that you screen your broker. The broker that you choose is an important partner and you should thus look for those who give good research reports as well as guidance.
Before you start to trade consider these core elements to trade in options. When you take an option you basically enter into a contract to either buy or sell a stock. Usually the options will have 100shares in a single contract. It will be at a set price for a set date. To place trade on options you need to decide on which direction you think the stock price will move, predict how high or how low the stock may move from the current price and know what the time frame is in which the stock may mostly move.
You need to be clear on these three aspects before you decide to invest into an options contract. Read the review on options trading and if you are an amateur trader then it is best to go slow and master share trading before you plunge into the risky options trading