Following are the steps that should be kept in mind while buying call option and put option:
- Research the online brokerage services specialized in option trading (e.g. OptionXpress)- compare option trading fees and services
- Open an option trading account with the brokerage service you choose
- Transfer funds to your brokerage option account
- Learn the details about simple option trading
- Decide which stock or index you want to purchase options on
- Decide if you want to purchase call or put option , Call will capture rise in stock price, while put will profit if the underline stock falls
- Decide the strike price of the option you want to purchase, Out of Money options will be cheaper than At-the-money or In-the-Money options but chances of making money will be reduced
- decide the time frame of the option (longer options will be more expensive)
- purchase the options on your trading account
- sell option before expiration (last day of trading is the third friday of the correspondent month)