Options Basics

ShareBuilder has simplified the options trading process and we can help you get started.

This tutorial will lead you through the information and tools that are available on our site.

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Learn & Plan

Our easy-to-use Learn & Plan section has the tools and information you need to learn about options, including benefits and the risks.

• From the Learn & Plan tab, click on "Investing"
• You'll find a range of articles, from information to help you get started to strategies to fit your goals
• Try out a quiz or use our calculators to understand option valuation

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Research

Our quotes and research section makes it easy to find the options information you need.

• Search for options symbols and quotes
• Use calculators and our position simulator to experiment with different strategies

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Approval Process

We've made the application and approval process as simple as possible to help you get started.

• Complete the 2-page application in just a few minutes
• If you're approved, you'll receive notification within about 5 business days

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Trading

We'll guide you through the trading process.

• Trade with our simple, easy-to-navigate interface
• Click the help links for answers to commonly asked questions
• Helpful tutorials will guide you step-by-step through the trading process

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Tracking your investments:

Our tracking tools make it easy to follow your options portfolio:

• See an overview of your options positions within your entire portfolio
• Receive automatic email alerts on positions nearing expiration

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Using options research

ShareBuilder offers a variety of options trading tools and resources. To access them, click on the "Quotes & Research" tab and then on "Options".

Options Trading Tools include:

• Quick access to option symbols & quotes
• Options calculators
• A position simulator

Learn More About Options includes:

• Quick highlights of the educational resources in our Learn & Plan section

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Options calculators

The options calculators can help you understand options valuation.

• Learn how the underlying stock's price, volatility, and other changes can influence the valuation of an option
• Choose from the basic or advanced calculators based on your experience level

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Positions simulator

Try out options trading risk-free with our position simulator.

• Establish hypothetical positions
• Experiment under simulated market conditions
• Test different options strategies

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Find option symbols

Option chains are lists of all the available options related to a particular stock.

• Enter the underlying security symbol to find the available options
• Search for options by symbol, type and range

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Find option symbols

We've created several simple ways to access option symbols & quotes.

• Look up a detailed quote on the underlying security and click on its "Options" tab
• Enter the underlying stock symbol in the quick quote box, select "Options" and click "Go"

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Find option symbols

Options symbols are displayed according to month, type (call or put), and the current strike price of the underlying stock. The option symbol, quote attributes and strike price are also listed, and options that are identified as "In-the-Money" are shaded green.

• Click on the option symbol for a detailed view
• Click on "trade" to place an order
• Change your search terms to narrow your options search results

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Writing a covered call

A call is "covered" when the writer actually owns the underlying stock represented by the options contracts. Writing a covered call can be an effective way to generate income off a slow moving stock. (this would be a neutral to bullish strategy)

How to write a covered call

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Writing a covered call

Getting started:

1. Click the "Trade" tab and then "Options Trading" from the green navigation bar
2. Click the "Covered Calls" tab in the body of the page
3. Select "Write a Covered Call". The order entry fields will automatically display

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Writing a covered call

Entering your order:

1. Choose a stock from your eligible securities
2. Enter the option symbol in the appropriate field
3. Or click on Find Option Symbol to search
4. Enter the number of contracts
5. Select order type (Market or Limit) and click the "Next" button

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Writing a covered call

Verifying your order:

1. Review and verify your order details (Remember: your commission and contract fee are dictated by your pricing program)
2. Click on the (?) icon for answers to commonly asked questions
3. Click the "Place Order" button. You'll see your confirmation page

Congratulations! You've written a covered call.

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Unwinding a covered call

When you wish to sell your underlying stock position due to rise or fall of the market price but must close your short call position first.

How to unwind a covered call

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Unwinding a covered call

Getting started:

1. Click the "Trade" tab and then "Options Trading" from the green navigation bar
2. Click the "Covered Calls" tab in the body of the page
3. Select "Unwind". The order entry fields will automatically display

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Unwinding a covered call

Entering your order:

1. Your "action" will automatically be "Buy Call to Close"
2. Choose the option you'd like to unwind from your Option Symbol pull down menu
3. Enter # of contracts in the appropriate field (must not exceed maximum)
4. Then enter your sell order details for the underlying security in the Real-time Trade section

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Unwinding a covered call

Verifying your order:

1. Review and verify your order details (Remember: your commission and contract fee are dictated by your pricing program)
2. Click on the (?) icon for answers to commonly asked questions
3. Click the "Place Order" button. You'll see your confirmation page

Congratulations! You've unwound a covered call.

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Scenario: Buying a long call

When you buy a "long call", you are purchasing the right, but not the obligation, to buy a certain stock at a certain price.

How to buy a long call

Scenario: Buying a long put

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Scenario: Buying a long put

When you buy a "long put", you are purchasing the right, but not the obligation, to sell a certain stock at a certain price.

How to buy a long put

Scenario: Buying a long call

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Buying a long call or put

Getting started:

1. Click the "Trade" tab and then "Options Trading" from the green navigation bar
2. Click the "Buy/Sell Options" tab in the body of the page

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Buying a long call or put

Entering your order:

1. Select "Buy a Call to Open" or "Buy a Put to Open" from the Option Order Type menu
2. Enter the option symbol in the appropriate field
3. Or click on Find Option Symbol to search
4. Enter the number of contracts you want to buy
5. Select order type (Market or Limit) and click the "Next" button

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Buying a long call or put

Verifying your order:

1. Review and verify your order details (Remember: your commission and contract fee are dictated by your pricing program)
2. Click on the (?) icon for answers to commonly asked questions
3. Click the "Place Order" button. You'll see your confirmation page

Congratulations! You've bought a long call or put.

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Scenario: Selling a long call

You've purchased long call options (the right to buy a certain stock at a certain price). You can either act on your right, and "exercise" your call option or you can sell your call and close the long position.

How to sell a long call

Scenario: Selling a long put

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Scenario: Selling a long put

You've purchased long put options (or the right to sell a certain stock at a certain price). You can either act on your right, and "exercise" your put option or you can sell your put option to close the long position.

How to sell a long put

Scenario: Selling a long call

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Selling a long call or put

Getting started:

1. Click the "Trade" tab and then "Options Trading" from the green navigation bar
2. Click the "Buy/Sell Options" tab in the body of the page

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Selling a long call or put

Entering your order:

1. Select "Sell a Call to Close" or "Sell a Put to Close" from the Order Type menu
2. Then select the options symbol from the pull down menu
3. Enter # of contracts from your available contracts or you can choose to sell all contracts
4. Select order type (Market, Limit or Stop-loss) and click the "Next" button

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Selling a long call or put

Verifying your order:

1. Review and verify your order details. (Remember: your commission and contract fee are dictated by your pricing program)
2. Click on the (?) icon for answers to commonly asked questions
3. Click the "Place Order" button. You'll see your confirmation page

Congratulations! You've sold a long call or put.

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