Options Orders

Written by Michael Federico
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A lot of novice traders are not fully aware of the differences between trading stocks and placing options orders. When a person places an option order, he is reserving the right to buy or sell a certain amount (usually 100) of shares of a stock at a certain price (strike price). When a person engages in standard stock trading, he usually does so with the belief that the price of his shares will go up and that he will make money when he sells. People who place options orders often hope that prices will plummet.

Options orders are not indefinite. If the stock does not reach its strike price by an order's expiration date, the transaction will not take place. Some firms will charge an investor a fee simply for placing an order, so a person can end up spending money on a trade that never happens.

Placing Options Orders Online

For many years, the majority of online trading services did not allow account holders to place options orders. However, that has begun to change, as new technology has allowed online brokers to make major advances. In fact, the majority of trading sites now make it very easy for people to place options orders. The best sites break down the order in detail, so a person can easily keep track of the strike price and expiration date.

An online broker that makes it easy to track stocks will be very beneficial for a person who deals in options. Once an order is placed, an investor should be able to monitor the stock's performance to see if his transaction is going to go through. This is especially important if a person is planning to sell shares immediately after an option order is executed.


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