Start small. Many beginners lose their initial capital by "swinging for the fences" on contracts that expire in just a few days.
You’re betting the stock price will go down . A Put gives you the right to sell the stock at a set price. 3. Navigate the Option Chain how to buy stock options
Brokers assign "levels" (usually 1–4). Level 1 might only let you write covered calls, while higher levels allow for more complex (and risky) strategies. 2. Learn the Two Main Flavors There are only two types of options you need to know: Start small
If your bet was wrong, the option might become worthless. In this case, you simply lose the money you paid for the premium. A Put gives you the right to sell the stock at a set price
This is the price you pay for the contract. Note: One option contract usually controls 100 shares . If the premium is listed as $2.00, the contract will actually cost you $200. 4. Place Your Order When you’re ready, you’ll select "Buy to Open."