Options trading has become one of the most preferred investment mechanisms in recent years. For newbies, it can be a daunting task. There's too much information available in the market, which often needs to be clarified.
1. Open an Options Trading Account
If you want to trade options, you must have an options trading account. Compared to a simple brokerage account for stock trading, an options trading account usually requires greater capital involvement.
An option contract is valuable only if the underlying stock price closes the option's expiration period “in the money,” i.e., either above or below the strike price. So, predicting the correct strike price is extremely important.