So, you’ve heard about options trading and you’re curious, or maybe even a little overwhelmed? Don’t worry. You’re not alone.

Trading options can feel complex at first, but once you crack the code, you’ll see why so many investors use them to boost returns, manage risk, or generate extra income.

A Brief Intro to Get You Started

Options trading gives you the right (but not the obligation) to buy or sell a stock at a specific price before a certain date.

Each option controls 100 shares of stock, and there are two main types: the Call Option lets you bet that the stock price goes up, while the Put Option lets you bet that it will go down.

You don’t need to own the stock to trade options, and that’s where things get exciting. Options give you leverage without borrowing money.

How to Read a Stock Option Quote

Here’s what you’ll typically see in an options quote:

A Ticker: This is a stock symbol (like AAPL for Apple).

The strike price: The price you can buy (call) or sell (put) the stock.

Type: There are two types, the Call or Put.

The expiration date: When the option contract expires.

Premium: This is the price you pay to buy the option.

For instance, a call option on AMZN with a $120 strike price expiring next month might cost $3. That’s $300 total (because options represent 100 shares).

How to Start Trading Options (Step-by-Step)

Open a brokerage account. Not every broker will let you trade options right away. Look for one that supports beginner-friendly options trading (like Robinhood, Webull, or E*TRADE).

Practice with a paper trading app. This is great for learning, as there’s no risk or possibility of losing your money. Try simulated platforms like Thinkorswim or TradingView.

Pick a direction: bullish or bearish? If you think a stock will go up, consider a call. If you think it’ll go down, try a put.

Choose an expiration date. The longer the time until expiration, the higher the cost, but also the more time for your prediction to play out.

Manage your risk. Only use money you’re okay with losing. Options can move fast, both up and down.

Keep Your Strategy Basic and Beginner-Friendly

With a Long Call, you expect the stock to go up. There’s low risk and limited loss, which means you only lose the premium if you’re wrong.
Meanwhile, with a Long Put, you expect the stock to go down. There’s also low risk with limited loss.

If you already own the stock, sell a call to earn extra income. This is called a Covered Call, and is great for long-term investors.

If you decide to go the way of a Cash-Secured Put, you agree to buy the stock at a lower price. If it doesn’t drop, you keep the premium