Brokers assign "levels" (usually 1–4). Level 1 might only let you write covered calls, while higher levels allow for more complex (and risky) strategies. 2. Learn the Two Main Flavors There are only two types of options you need to know:
Start small. Many beginners lose their initial capital by "swinging for the fences" on contracts that expire in just a few days.
This is the price you pay for the contract. Note: One option contract usually controls 100 shares . If the premium is listed as $2.00, the contract will actually cost you $200. 4. Place Your Order When you’re ready, you’ll select "Buy to Open."
Once approved, you’ll look at an "Option Chain"—a digital menu of available contracts. You need to pick three things: