We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

How do I Learn Options Trading Basics?

By Dana DeCecco
Updated: Feb 25, 2024

In order to learn options trading basics, the trader would access the options educational websites created specifically for this purpose. Options are complex derivatives. Before entering this speculative and risky market, the novice options trader must be informed and educated.

A good place to start would be looking for online sources of investment information. Some websites offer a very brief outlines about options trading basics that can help guide you toward further education on the subject. Other websites specialize in every aspect of options education and training. Online classes, webcasts and live seminars are sometimes available at no cost to the trader. Some websites have virtual trading systems with which a trader can sharpen his or her option trading skills before risking capital.

Options trading basics are only the beginning on the more comprehensive websites. The trader can move on to advanced options strategies. Many advanced strategies are explained in detail on these websites, complete with graphs and charts.

You can learn what options are, what they are used for and how they work. The importance of education before entering the options market cannot be overstated. These types of sites can be an excellent resource for the novice trader.

Education in options trading basics is also available from a number of online options brokers. All of these educational resources are available at no cost to the trader. Many books have been written on this subject and can be purchased online from option brokers and book retailers.

In the United States, options brokers typically are required to supply a trader with a publication called Characteristics and Risks of Standardized Options. This is required reading before being approved for options trading. The trader will be assigned a level at which he or she is allowed to trade. This level will depend on options trading experience and the amount of risk capital invested.

Call and put options are available for trading. These options can be bought or sold. Selling an option is referred to as writing an option.

The trader should thoroughly understand the four basic option trades. All other complex option trades are combinations of these four trades. These trades are buying or writing calls and buying or writing puts. Buying options gives the trader rights, for which he or she pays a premium. Writing options obligates the trader, for which he or she is paid a premium.

Fully understanding these four basic option trades is the foundation of the options trader's arsenal. Options can be a useful addition to your trading skills. Take advantage of the free educational resources available online.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
Share
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.