Options Trading Explained Online

Learn option trading and you can profit from any market condition. Master the skills on how to trade options using the many sophisticated option trading strategies.

To help you along in your path towards understanding options trading, we offer a comprehensive library of option investing tutorials, tips and advice right here at The Options Guide, where the aim is to teach the art of investing using options in the simplest way possible.

Option Basics:
What are Stock Options?

Before you begin trading options, you should know what exactly is a stock option and understand the two basic types of option contracts - puts and calls. Learn how they work and how to trade them for profits.... [Click to continue...]

Beginner Strategy:
Covered Calls

The covered call is a popular option trading strategy that enables a stockholder to earn additional income by selling calls against a holding of his stock.... [Click to continue...]

Advanced Concepts:
Understanding Option Greeks

When trading options, you will come across the use of certain greek alphabets such as delta or gamma when describing risks associated with various options positions. They are known as "the greeks".... [Click to continue...]
Stock Option Trading Basics:
Why Invest with Options?

For the short to medium term investor, stock option investing provide an additional suite of investment options to let him make better use of his investment capital.... [Click to continue...]

Advanced Strategy:
Reverse Iron Butterfly

The reverse (short) iron butterfly is a limited risk, limited profit options trading strategy that is designed to make a profit when the underlying stock price makes a sharp move either up or down.... [Click to continue...]

Advanced Concepts:
Futures Options Trading

Another way to play the futures market is via options on futures. Using options to trade futures offer additional leverage and open up more trading opportunities for the seasoned trader.... [Click to continue...]

Site Feature:
Options Strategy Search Engine

Profit graphs are  visual representations of the possible outcomes of options strategies. Profit or loss are graphed on the vertical axis while the underlying stock price on expiration date is graphed on the horizontal axis.

A quick way to scan for option trading strategies is by using profit graphs....

Stock Option Advice:
Day Trading using Options

Day trading options can be a successful, profitable strategy but there are a couple of things you need to know before you use start using options for day trading.... [Click to continue...]

Stock Option Tutorial:
Dividend Capture using Covered Calls

Some stocks pay generous dividends every quarter. You qualify for the dividend if you are holding on the shares before the ex-dividend date....[Click to continue...]

Stock Options Advice:
Leverage using Calls, Not Margin Calls

To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk. A most common way to do that is to buy stocks on margin....[Click to continue...]

Stock Option Advice:
Buying Straddles into Earnings

Buying straddles is a great way to play earnings. Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable. For instance, a sell off can occur even though the earnings report is good if investors had expected great results....[Click to continue...]

Stock Options Tutorial:
Writing Puts to Purchase Stocks

If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount....[Click to continue...]

Stock Options Advice:
Effect of Dividends on Option Pricing

Cash dividends issued by stocks have big impact on their option prices. This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date....[Click to continue...]

Advanced Concepts:
Put Call Ratio - What It Is and How to Use It

Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator.... [Click to continue...]