How to Trade Options on E-Trade

E-Trade has a user-friendly trading platform and offers extensive options brokerage services. After opening an account with E-Trade, you need to fill out an additional application and obtain approval for options trades. Once approved, you should familiarize yourself with the user interface on the options screen and follow a number of options before making large trades. Always remember that options involve far greater risks than stocks. Their values can easily decline to zero, and often do.          

Things You'll Need

• An account with E-Trade
• Options trading application form

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Suggestions

1. Open an account with E-Trade. Visit E-Trade and apply to open an account. Since all accounts need a signature, you must send in at least some of the forms by mail or deliver them by hand to a local E-Trade branch. You will be asked to provide a U.S. residential address, date of birth, Social Security number or tax ID number and the name and address of your employer (if applicable). Upon acceptance, you must fund your account either electronically or with a mailed check.
2. Apply for option trading privileges. Once your account is up and running, you can apply for the right to trade options. Since your signature will already be on record, this application can be made on-line. You will be asked to detail your investment experience and assess your risk tolerance. This step is to ensure that investors fully understand the dangers involved with options and are capable of making informed investment decisions about these complex instruments.
3.  Get to know the interface. After the approval of your options trading application, thoroughly familiarize yourself with the user interface on the options trading screen. You can access the options page for a particular security by typing the ticker symbol of the stock in the "quote" box on the upper right hand corner and, once you receive the quote, clicking on the "option chain" link. Here, options are classified by their expiration date. Select the expiration date you are interested in from the drop-down menu for a list of all options on a particular security with a specific expiration date.
4. Start small. Even if you have traded stocks in the past, keep in mind that options have unique characteristics. Watch the options market closely and understand how options prices move in response to changes in the value of the underlying stock before you make actual trades. When you do, start small and do not put all of your eggs in one basket.

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How to Set Up an Online Trading Account

These days, all brokers offer online trading capabilities. Some brokers provide web-based trading platforms that you can access from any computer while others require you to download trading platform software. There are also several other things you may need to do to make sure your trading setup works smoothly.

Suggestions

1. Get the fastest Internet connection you can from the most reliable provider. Trading software provides streaming data in real time that won't work properly over a slow or unreliable connection.
2. Select a broker. Brokers have similar trading platforms but cater to different clienteles. Some provide bare-bones service to experienced traders; others offer more support and advice. Some are strictly online; others have local branches that offer trading seminars for beginners. Talk to several to see with whom you feel most comfortable.
3.  Check with the broker to see if your computer meets its software requirements: processing speed, RAM and operating system.
4. Download, fill out, sign, and mail in the brokerage account application. If the broker you choose has a local branch nearby, you can open an account in person. In addition to the identifying information, you'll be asked for your employment status, annual income, net worth and investing experience and objectives. Brokers need this information to make sure your trading patterns conform to your stated objectives.
5. Decide whether you want a cash or margin account. Margin allows you to borrow money from your broker to buy more securities or to withdraw cash without having to sell your holdings.
6. Fund your account. The minimum opening balance varies from broker to broker but is usually less than $2,000. You can send a check or link your bank account to the brokerage account to transfer funds electronically.
7. Familiarize yourself with the trading platform before placing actual trades. A trading platform comes with a lot of features. Don't get intimidated. Most traders use about 20 to 30 percent of what's available, based on their trading style and method. Call the broker if you need help navigating through the platform.

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How to Buy and Sell Stocks on Etrade

Many people are turning to online sites in order to manage their investments. With a few simple clicks, you can buy and sell stocks without the need to speak to an accountant first. You will still pay a commission, but typical online investment fees are much less. Through eTrade, you can buy and sell your stock options securely online.

 

Suggestions

1. Open an eTrade account. Provide your financial details, contact information and then choose a login name and password in order to access your trading options.
2. Deposit money into your portfolio. After finishing your account application, you will need to deposit funds to start investing. You can transfer money from a bank account or credit card with the eTrade Quick Transfer tool
3. Receive advice from online eTrade advisors and stock charts. You can then directly access the stock you wish to buy from the Exchange Traded Fund Center from your trading menu by either performing a search or entering the stock symbol.
4. Decide on the number of shares that you wish to buy and enter that into the order menu. In order to complete the transaction, a $7.99 to $12.99 commission fee will be applied to your eTrade account as well as a 0.75 contract fee.
5. Go to the "Trading and Portfolios" menu on eTrade in order to see a stock if you wish to sell on eTrade. Choose the "Trade" option from the list of selections. You will then have to enter "Sell" in order to signify the order type.
6. Type the number of shares that you wish to sell of the particular stock as well as the stock symbol. Select "Market" when inquired for the price type of the stock you are selling. Save your changes in order to finish selling your eTrade stock.

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