The Complete Guide to Trading Options: How to Open Your Account, Get Clearance, and Trade Calls, Puts, and Spreads

by D.R. Barton, Jr.

Dear Red Alert Reader,

When it comes to trading options, it can be easy for investors to get overwhelmed.

But the truth is, options are one of the best tools an investor can use to get the most out of each trade. They offer you flexibility, diversification, and more control in protecting your portfolio.

They can be used in almost any type of market condition… up, down, and sideways.

Options can help you:

Protect your investments against a decline in market prices…
Increase your income on current or new investments…
Buy equities at lower prices…
And benefit from an equity price’s rise or fall without owning the equity or selling it outright.

And by opening this guide, you’ve taken the first step to turbo-charging your profits when you’re trading for yourself or following along with one of my trading research services.

In this four-part guide, we’re going to cover everything you need to know about setting up an account with an options broker and how to get your options clearance. There are also step-by-step instructions on how to place the call and put option trades you will see as part of this service.

Let’s start at the beginning…

Here’s how you choose your broker.

Choosing the Best Fit for Your Money

To be a successful investor, you need to choose your stock market middleman wisely.

And when it comes to options trading, I always recommend Charles Schwab.

Charles Schwab is known for excellent customer service as well as great options trade execution. In fact, they were rated #1 in both customer service and trade reliability by Investor’s Business Daily.

They also offer a security guarantee: “Schwab will cover 100% of any losses in any of your Schwab accounts due to unauthorized activity.”

That’s a promise that’s hard to beat.

And beyond that, as we speak, Charles Schwab is offering 500 commission-free trades (for up to one year) to any qualifying clients who open a trading account.

Now, just to be clear, I haven’t personally worked with Charles Schwab, and Money Map Press has no financial relationship with them either. I just happen to know how great they are when it comes to your trading options.

Now, if you decide to open a Charles Schwab account, make sure you’ve got the following information handy:

Your Social Security number
Your driver’s license or government-issued state identification information
Your employer’s name and address (if applicable)
Statement of information for the assets or cash you want to transfer to your new options account

Once you have everything, simply call (888) 279-0888 or click here.

Charles Schwab will take it from there…

And if you don’t want to use them as your broker, that’s fine too. After all, you’re the only person who can decide which broker is right for you. Just be sure to do your own research before you commit.

Now, Charles Schwab isn’t the only online options broker around.

In fact, there are dozens out there, all specializing in different things. While I can’t personally vouch for any of them, many of my readers and students have told me that TD Ameritrade and Fidelity work well for them.

So if you’re interested in either one, here’s how you can learn more about them or any offers they may currently have and (when you’re ready) how to open your account:

For TD Ameritrade, go to www.tdameritrade.com or call (800) 454-9272
For Fidelity, go to www.fidelity.com or call (800) 343-3548

As far as investors go – you’re already way ahead of the pack.

But you’ve still got a few more things to do before you can start successfully trading options.

And one of those things is getting your options clearance.

How to Get Your Options Clearance

Simply put, this determines which types of options you can trade. And all you have to do is answer a series of questions.

And I’ve broken down the process of opening your options account into five very simple steps.

Now keep in mind that while all brokers will ask you these questions, the specific order and phrasing will vary. In this guide, I’ve given you examples of the questions you’ll be asked based on Charles Schwab’s application process.

So let’s jump in…

STEP 1

The first thing you need to do is get whatever clearance lets you buy “calls” and “puts.”

Clearance levels can vary from broker to broker but typically include four levels (some include five).

Here are the clearance levels for Charles Schwab…

For my research services, you’ll need clearance for long calls and long puts.

In the chart above, this means you’ll need to get Level 1 clearance.

The other thing your broker will ask you is whether or not you want “Margin Trading” or “Margin” added to your account.

A margin account is basically a “loan” given to you by your broker. This allows you to enter certain trades that could potentially end up costing you more money than you initially put in them.

You don’t have to worry about this when it comes to my service, though. Since you only need a minimum of Level 1 clearance, Charles Schwab (and some other brokers) won’t require you to open a margin account.

And keep in mind that you can always apply (or re-apply) for a higher clearance level. All you need to do is call your broker.

Now let’s move on to the next step…

STEP 2

After you’ve chosen the clearance level you want, your broker will then collect your personal information (such as your income, employment, and trading experience).

Like the clearance levels, these questions could vary depending on your broker, but the purpose is the same: to verify your identity and determine your suitability for options trading.

This is what you can expect using Charles Schwab’s options application:

As you can see, this information is really no different from any other financial application you might complete to, say, open a checking, savings, or retirement account.

STEP 3

When you get to questions about your annual income and net worth, remember that this is only used to determine what types of options you can trade as well as to verify your identity.

It’s similar to the information you’d provide when filing your annual tax return too:

Charles Schwab (and many other brokers) ask for both “Total Net Worth” and “Liquid Net Worth.”

Liquid Net Worth includes all investments that can easily be turned into cash, including funds, stocks, and so on. However, it does not include any real estate investments. So don’t include the value of your house here.

Your Total Net Worth will include all of your Liquid Net Worth, as well as any illiquid assets you may own (such as real estate).

And don’t worry if this seems too complicated to figure out on your own… Charles Schwab, for example, has the Personal Net Worth Worksheet you can use.

There are also plenty of calculators and other helpful tools online you can use, such as the “What Is My Net Worth?” Calculator.

STEP 4

The second to last step in getting your options trading clearance is providing some information about your trading experience and knowledge.

Now this isn’t a trick question… you’ll want to check the box under knowledge level based on how much you know about options trading.

If you’ve never heard of options (until now, of course), you’ll want to check the box next to “None” under “Knowledge Level.”

If you’ve heard of options before, then you’ll want to check the box next to “Limited” under “Knowledge Level.”

If you’re pretty familiar with options, you’ll want to check the box next to “Good” under “Knowledge Level.”

And if you know options like the back of your hand, then by all means, go ahead and check the box next to “Extensive” under “Knowledge Level.”

The same thing applies to “Options Trading” below…

If you’ve never traded options before, you’ll want to check the box next to “None.”

If you’ve placed an options trade before but are still pretty new to them, you’ll want to check the box next to “Limited.”

If you trade them pretty regularly, you’ll want to check the box next to “Good.” And if you’re trading options like a pro, then go ahead and check that box next to “Extensive.”

Here’s how it will most likely appear…

STEP 5

Once you’ve reached this step, the only thing left for you to do is sign and mail, fax, or upload (depending on your broker) your application.

That’s it!

Remember, if at any point during the application process you have any questions, don’t hesitate to call your broker and ask.

Their job is to help you, after all, and they’ll able to clear anything up in no time. I’ve provided below the telephone numbers to Charles Schwab, TD Ameritrade, and Fidelity.

Where to Go from Here

Once you’ve received your options clearance, you’re on your way to becoming an options pro.

There are just a few more steps you need to take before I suggest you dive right into options trading.

And that’s learning how to place the two main types of options: calls and puts.

We will be utilizing both puts and calls to maximize our profit potential. We’ll get into both in a second.

That’s why it’s imperative that you are comfortable with putting on these kinds of trades.

And remember, if at any point you’re not sure what to do, never hesitate to contact your broker. As a customer, they owe you time on the phone to make sure you’re buying the option you want to buy.

Here are the phone numbers to Schwab, TD Ameritrade, and Fidelity:

For Schwab, call (800) 435-4000
For TD Ameritrade, call (800) 669-3900
For Fidelity, call (800) 343-3548

Just read them the original Entry and Exit/Profit-Taking Strategies you received, and they’ll be able to tell you how to enter your trade correctly.

You can also look at each broker’s “Frequently Asked Questions” page on their website, which will include an explanation of how to use their trading platform (or who to contact to find out):

For Schwab, go to: www.schwab.com/public/eac/resources/faqs
For TD Ameritrade, go to: www.tdameritrade.com/education/account-types-and-investment-products/how-to-trade-options.page
For Fidelity, go to: www.fidelity.com/customer-service/faqs-accounts-trade-summary

Now that we know how to open an account and get clearance, it’s time to look at trading options themselves. It only gets more exciting from here…

How to Place a Call Trade

I include a call recommendation whenever I expect the markets to trade higher.

And just like its put counterpart, call trades are so easy to execute that it may surprise you.

In fact, I’m going to show you just how easy it is to place call trades – and take profits – using a real trade alert I sent to my subscribers.

Remember, this is an old trade recommendation that’s since been closed. So you do not want to actually place this trade. Plus… it wouldn’t work anyway if you tried.

And don’t worry if yours doesn’t look exactly the same. All of the information you need to place the trade is always in the same place in the instructions:

Action to Take:

Buy: MU Nov. 18, 2016, $17 Strike Calls (MU161118C00017000) at 95 cents or less.
Stop-loss: Apply 1% of your core capital or 3% of your speculative capital. We will initially risk 100% of the premium on this trade.
For your profit-taking exit: Sell 50% of your contracts at 100% profit and hold the remaining contracts for further guidance.

Now these are the instructions I sent my members on Oct. 13, 2016.

My original intention had been to take advantage of the pullback that had occurred in the semiconductor sector. I had originally hoped to ride out the pattern for a month. But only 14 days later, on Oct. 27, these calls increased 103.28% – even better than a double (100% gains)!

That’s the beauty of options. You can essentially “rent” an expensive stock for less while still capturing the same – or higher – profits that you would had you bought the stock outright.

In this case, one share of Micron Technology Inc. (Nasdaq: MU) costs over $22.98 right now. That’s one single share. My members had the opportunity to control 100 shares of the stock for only 95 cents or less.

But to really understand exactly how to place a trade like this – and how it could deliver you triple-digit gains – let’s break down what this alert actually means.

Here is exactly how a call option will be presented to you…

First, you will be given two trades.

The first thing you’ll see is a regular stock opportunity.

The second is a “Buy” action for your options trade.

Your options trade instructions will be split up into three parts: Entry Strategy, Stop-Loss, and the Profit-Taking Exit.

I’ve marked them in green, blue, and gray, respectively, below:

Buy: MU Nov. 18, 2016, $17 Strike Calls (MU161118C00017000) at 95 cents or less.

Stop-loss: Apply 1% of your core capital or 3% of your speculative capital. We will initially risk 100% of the premium on this trade.

For your profit-taking exit: Sell 50% of your contracts at 100% profit and hold the remaining contracts for further guidance.

Each of these parts are equally important. But since you always need to set up your entry strategy first, we’re going to focus on that part of the alert right now…

Entry Strategy

Here’s a breakdown of our example alert’s Entry Strategy from left to right:

BUY: This means that you’re opening a new position rather than closing one you already opened and that you’re opening your position by buying something.

MU: This is the ticker of the company (in this case Micron Technology) that your option is on. Some brokers will call this “the underlying security,” “the underlying stock,” or just “the underlying.”

Nov. 18, 2016: This is the expiration date of the option you’re buying. In other words, the option disappears after this date. Now, usually we want to close the position (by selling the option) before the expiration date – but I’ll tell you all about that below, when we discuss the Exit Strategy.

$17: This is the strike price of the option you’re trading. Anyone buying a call option with a $17 strike price is buying the right, but not the obligation, to buy the underlying stock or ETF (in our example, shares of MU) at $17, no matter what that stock is really trading at.

Strike Calls: This tells you the option type you want to trade – either a call or a put.

(MU161118C00017000): This is the option chain – a technical, abbreviated name for the option you’re trading. The option chain includes all the information we’ve discussed above. The letters at the beginning (“MU”) mark the ticker of the underlying stock, followed by the expiration date (“161118” means “2016 Nov. 18”), followed by the option type (“C” for calls, “P” for puts), followed by the strike price (in tens of a cent – “00017000” means $17).

At 95 cents or less: Finally, this sets the “limit price” – the most you want to pay to enter this trade. I never enter a trade without setting a limit price and neither should you. After all, even the most lucrative pattern will do you no good if you pay too much to get in on the trade.

My subscribers, for example, recorded an entry price of 61 cents in this trade example. Now that means we would’ve doubled our profits when the trade reached $1.22. But it actually exceeded our target price, climbing to $1.24. And that means we were able to capture even better than “a double” (103.28%) in just 15 days.

But say this trade cost more than the recommended limit of 95 cents. If that happened, we wouldn’t have even opened the position – and none of my members should have either. That’s the point of the limit price.

If you didn’t set a limit price, you could’ve ended up getting your order filled at a much higher price, like $1.15. In that event, you would’ve needed the trade to reach $2.30 instead of only needing it to reach $1.22. And that extra dollar and some change is the difference between taking a profit, breaking even, or suffering a loss.

That’s why I always enter trades using a limit price…

Now let’s talk about how you actually place a trade in your broker’s trading platform using all of the information we just went over.

How to Enter Your Alert Instructions

Keep in mind that trading platforms can look different depending on your broker used. But as long as you can enter all the information below, your trade will be entered exactly as it should.

*Anything on your options trading screen that’s not in this list can be safely left at its default setting.*


Item on Your Screen	Action
Symbol	Enter the ticker symbol found in your Entry Strategy (in yellow above).
Option/Option Chain	Select the expiration date (in green above), the strike price (in blue above), and option type (in orange above – for this trade it is C for “call”) in your Entry Strategy.
Expiration Date	Select the expiration date found in your Entry Strategy (in green above).
Strike Price	Select the strike price found in your Entry Strategy (in blue above).
Option Type	Select the option type in your Entry Strategy (in orange above – for this trade, it is C for “call”).
Action	Select the first three words of your Entry Strategy (in gray above). When entering a call, this will always be “Buy.”
Quantity	Select the number of options you want to buy. The choice is entirely yours, but I recommend spending no more than between 1% of your core capital or 3% of your speculative capital on any one trade.
All or None (optional)	If you entered a number higher than “1” under “Quantity,” you’ll want to check the “All or None” box to make sure that either all – or none – of the options you ordered are filled, or none of them are. And if you entered “1” under “Quantity,” then move on to the order type.
Order Type Options will include: • “Market” or “Market Price” • “Limit” or “Limit Price” • And others…	If the end of your Entry Strategy mentions a “limit” (see above, in red) then choose “Limit” on your screen and enter the limit amount from your alert (also in red) in dollars. In our MU example, you would select “Limit” and enter 95 cents. If instead of mentioning a “limit,” the end of your alert mentions “at market,” then choose “Market” on your screen. But remember, entering a trade without setting a limit price is always a very bad idea. Note: In some cases, setting a low limit may mean that your trade never gets executed, because you’re trying to buy an option at a price that’s below what everyone is selling it for. In such cases you may want to use your trading platform (or call your broker) to “cancel” the order you just put in.
Preview Order/Submit Order	Just like stock trading (or any online shopping, for that matter), you’ll want to click this button to place your trade – but only after you’ve reviewed all of the information you entered. You want to make sure your trade is actually correct before you make your purchase, so to speak. The button that says “Preview Order” will take you to another screen where you can confirm that you’re placing the correct order (compare what’s on your screen to your alert) and then click “Submit Order.”
Routing	No special routing required.

That’s it!

Congratulations, you’ve successfully placed your first call options trade.

But before you can sit back, relax, and watch your money roll in, there’s one more thing you need to do…

Profit-Taking Strategy

Before you can actually collect your profits, you need to exit your trade first.

In order to do that, you need to set your Profit-Taking Exit.

Having your exit in place ensures you get out of your trade – automatically – without having to spend your entire day in front of the computer. I’m sure you’ve got much better things to do…

So let’s break down the profit-taking exit section of our example MU alert:

Profit-Taking Strategy:

When you first receive your buy instructions, I will always include when and how you should pocket the profits from any given trade.

The instructions will look similar to this…

For your profit-taking exit: Sell 50% of your contracts at a 100% profit and hold the remaining contracts for further guidance.

The first thing you will notice is that I typically recommend selling half of your contracts when they double – otherwise known as taking a “free trade.”

When a stock you own gains 100%, you sell half of your holdings. That covers your original investment. Because your costs are covered, what remains is pure profit – hence the “free trade.” You’re playing with the house’s money. This leaves us open to even higher gains, should the stock continue to take off.

Now, when we close out of a stock entirely, the instructions will look a little different…

Sell: If you have not already done so, sell your remaining contracts in MU Nov. 18, 2016, $17 Strike Calls (MU161118C00017000) at the best available price.

Remember, while your alert will have different details, all the information you need will always be presented and in the same order as here. So don’t worry – you’ll know exactly how to set your Exit Strategy up in no time!

Sell: This means that you’re closing an existing position (In fact, as you’ll see, you’re closing the position you just opened.), and that you’re closing your position by selling something (the option you just bought).

MU: Again, this is the ticker of the company that your option is on. Some brokers will call this “the underlying security,” “the underlying stock,” or just “the underlying.” This should always be exactly the same as in the Entry Strategy.

Nov. 18, 2016: As before, this is the expiration date of the option you’re buying, and should match the expiration date given in your Entry Strategy.

$17: This is the strike price of the option you’re selling (and so needs to match the one you bought in your Entry Strategy).

Strike Calls: This tells you the option type you want to trade – either a call or a put.

Now let’s take a look at where each part of the Profit-Taking Strategy examples I gave you above go in your options trading screen:

*Anything on your options trading screen that’s not in this list can be safely left at its default setting.*


Item on Your Screen	Action
Symbol	Enter the ticker symbol found in your Exit/Profit-Taking Strategy (in yellow above).
Option/Option Chain	Select the expiration date (in green above), the strike price (in blue above), and option type (in orange above – for this trade it is C for “call”) in your Exit Strategy.
Expiration Date	Select the expiration date found in your Profit-Taking Strategy (in green above).
Strike Price	Select the strike price found in your Profit-Taking Strategy (in blue above).
Option Type	Select the option type in your Exit/Profit-Taking Strategy (in orange above – for this trade, it is C for “call”).
Action	Select the first three words of your Exit/Profit-Taking Strategy (in gray above). When setting up your exit strategy on a call, this will always be “Sell.”
Quantity	You’ll need to choose the exact “Quantity” to sell as you did to buy in your Entry Strategy. The only exception is when your Profit-Taking Strategy instructs you to “Sell 50%” of the position. In this case, you’ll need to choose half of the exact “Quantity” to sell as you did to buy in your Entry Strategy.
All or None (optional)	If you entered a number higher than “1” under “Quantity,” you’ll want to check the “All or None” box to make sure that either all – or none – of the options you ordered are filled, or none of them are. And if you entered “1” under “Quantity,” you’ll want to move on to the next step.
Order Type Options will include: • “Market” or “Market Price” • “Limit” or “Limit Price” • And others… Your possible exit strategies include: • For 100% gains OR at market by 3 p.m. on (Specified Date) – whichever comes first • For 100% gains or higher. • SELL-to-close 50% of the position above: for 100% gains or higher. Await further instructions for the remaining 50% of the position above.	If the end of your Profit-Taking Strategy mentions “for 100% gains” or any other specific profit, then you’ll need to set your “Limit Price” to exactly double the amount you paid to open your position. Just think of it as twice the amount you paid for the trade. If the end of your Profit-Taking Strategy mentions “for 100% gains or higher,” then you’re really doing the same thing as above, just without an exit date. So again, you’ll need to set your “Limit Price” to exactly double the amount you paid to open your position. And finally, if you get instructions from me to “sell 50% of the position for 100% gains or higher then await further instructions for the remaining 50%,” then you’ll need to set your “Limit Price” to exactly double the amount you paid to open your position, but only for half of your position (see “Quantity” above).
Preview Order/Submit Order	Just like stock trading (or any online shopping, for that matter), you’ll want to click this button to place your trade – but only after you’ve reviewed all of the information you entered. You want to make sure your trade is actually correct before you make your purchase, so to speak. The button that says “Preview Order” will take you to another screen where you can confirm that you’re placing the correct order (compare what’s on your screen to your alert) and then click “Submit Order.”

And that’s it!

You’ve now both entered a call trade and set it up to automatically exit when it hits its profit target.

Congratulations!

Now you’re ready to explore the “other” side of options – the put. We’re almost done.

How to Place a Put Trade

The second most common trade recommendation is known as a put.

I send put recommendations when I anticipate the markets trading lower. And just like its call counterpart, put trades are extremely easy to execute.

But to make sure you’ve got it down pat – and are ready to take profits – I’m going to show you a real put trade alert I sent to my members.

Now remember, this is an old trade recommendation that’s since been closed. So you do not want to actually place this trade. Plus… it wouldn’t work anyway if you tried.

And don’t worry if yours doesn’t look exactly the same. All of the information you need to place the trade is always in the same place in the instructions:

Actions to Take:

Buy: USO Sept. 30, 2016, $11 Strike Puts (USO160930P00011000) at 55 cents or less.
Stop-loss: Apply 1% of your core capital or 3% of your speculative capital. We will initially risk 100% of the premium on this trade.
For your profit-taking exit: Sell 50% of your contracts at 100% profit and hold the remaining contracts for further guidance.

Now these are the instructions I sent my subscribers on Aug. 23, 2016.

I had originally hoped to ride out the pattern for a month. But only nine days later, on Sept. 1, these calls increased 100%.

That’s the beauty of options. You can essentially “rent” an expensive stock for less than it costs to buy while still capturing the same – or higher – profits that you would had you bought the stock outright.

In this case, one share of ProShares UltraShort Bloomberg Crude Oil (NYSE: SCO) costs over $62 right now. That’s one single share. My members had the opportunity to control 100 shares of the stock for only 55 cents or less.

But to really understand exactly how to place a trade like this – and how it could deliver you triple-digit gains – let’s break down what this alert actually means.

Your options trade instructions will be split up into three parts: Entry Strategy, Stop-Loss, and the Profit-Taking Exit.

I’ve marked them in green, blue, and gray, respectively, below:

Buy: USO Sept. 30, 2016, $11 Strike Puts (USO160930P00011000) at 55 cents or less.

Stop-loss: Apply 1% of your core capital or 3% of your speculative capital. We will initially risk 100% of the premium on this trade.

For your profit-taking exit: Sell 50% of your contracts at 100% profit and hold the remaining contracts for further guidance.

Each of these parts are equally important. But since you always need to set up your entry strategy first, we’re going to focus on that part of the alert right now…

Entry Strategy

Here’s a breakdown of our example alert’s Entry Strategy from left to right:

Buy: This means that you’re opening a new position rather than closing one you already opened and that you’re opening your position by buying something.

USO: This is the ticker of the company that your option is on. Some brokers will call this “the underlying security,” “the underlying stock,” or just “the underlying.”

Sept. 30, 2016: This is the expiration date of the option you’re buying. In other words, the option will disappear after this date. Now, usually we want to close the position (by selling the option) before the expiration date – but I’ll tell you all about that when we get to the Exit Strategy.

$11: This is the strike price of the option you’re trading. Anyone buying a put option with an $11 strike price is buying the right, but not the obligation, to sell (or put) the underlying stock (in our example, shares of USO) at $11, no matter what that stock is really trading at.

Strike Puts: This tells you the option type you want to trade – either a call or a put.

(USO160930P00011000): This is the option chain – a technical, abbreviated name for the option you’re trading. The option chain includes all the information we’ve already discussed above. The letters at the beginning (“USO”) mark the ticker of the underlying stock, followed by the expiration date (“160930” means “2016 Sept. 30”), followed by the option type (“C” for calls, “P” for puts), followed by the strike price (in tens of a cent – “00011000” means $11).

At 55 cents or less: Finally, this sets the “limit price” – the most you want to pay to enter this trade. I never enter a trade without setting a limit price and neither should you. After all, even the best, most promising pattern is useless if you pay too much to get in on the trade.

For example, we recorded an entry price of 45 cents for this USO trade example. That means that we doubled our money when the trade reached 90 cents.

But if this trade cost more than the limit of 55 cents, we wouldn’t have opened the position – and none of my members should have either.

If you didn’t set a limit price, you might’ve gotten your order filled at a much higher price – say 85 cents. So instead of only needing the trade to reach 90 cents, it’d have to reach $1.70 before you could close the position for a double.

So you can see why I always enter trades using a limit price…

Now let’s talk about how you actually place a trade in your broker’s
trading platform using all of the information we just went over.

How to Enter Your Alert Instructions

Keep in mind that trading platforms can look different depending on your broker used. But as long as you can enter all the information in the following table, your trade will be entered exactly as it should.

*Anything on your options trading screen that’s not in this list can be safely left at its default setting.*


Item on Your Screen	Action
Symbol	Enter the ticker symbol found in your Entry Strategy (in yellow above).
Option/Option Chain	Select the expiration date (in green above), the strike price (in blue above), and option type (in orange above – for this trade it is P for “Put”) in your Entry Strategy.
Expiration Date	Select the expiration date found in your Entry Strategy (in green above).
Strike Price	Select the strike price found in your Entry Strategy (in blue above).
Option Type	Select the option type in your Entry Strategy (in orange above – for this trade, it is P for “put”).
Action	Select the first three words of your Entry Strategy (in gray above). When entering a put trade, this will typically be “Buy.”
Quantity	Select the number of options you want to buy. The choice is entirely yours, but I recommend spending no more than between 2 1% of your core capital or 3% on any one trade.
All or None (optional)	If you entered a number higher than “1” under “Quantity,” you’ll want to check the “All or None” box to make sure that either all – or none – of the options you ordered are filled, or none of them are. And if you entered “1” under “Quantity,” then move on to the order type.
Order Type Options will include: • “Market” or “Market Price” • “Limit” or “Limit Price” • And others…	If the end of your Entry Strategy mentions a “limit” (see above, in red) then choose “Limit” on your screen and enter the limit amount from your alert (also in red) in dollars. In our USO example, you would select “Limit” and enter 55 cents. If instead of mentioning a “limit,” the end of your alert mentions “at market,” then choose “Market” on your screen. But remember, entering a trade without setting a limit price is always a very bad idea. Note: In some cases, setting a low limit may mean that your trade never gets executed, because you’re trying to buy an option at a price that’s below what everyone is selling it for. In such cases you may want to use your trading platform (or call your broker) to “cancel” the order you just put in (See Step 6).
Preview Order/Submit Order	Just like stock trading (or any online shopping, for that matter), you’ll want to click this button to place your trade – but only after you’ve reviewed all of the information you entered. You want to make sure your trade is actually correct before you make your purchase, so to speak. The button that says “Preview Order” will take you to another screen where you can confirm that you’re placing the correct order (compare what’s on your screen to your alert) and then click “Submit Order”.

That’s it!

Congratulations, you’ve successfully placed your first put options trade.

There’s just one more thing you need to do before you sit back, relax, and watch your money roll in…

Profit-Taking Strategy

When you first receive your buy instructions, I will always include when and how you should pocket the profits from any given trade.

The instructions will look similar to this…

For your profit-taking exit: Sell 50% of your contracts at a 100% profit and hold the remaining contracts for further guidance.

The first thing you will notice is that I typically recommend selling half of your contracts when they double – otherwise known as taking a “free trade.”

Now, when we close out of a stock entirely, the instructions will look a little different…

Sell: If you have not already done so, sell your remaining contracts in USO Sept. 30, 2016, $11 Strike Puts (USO160930P00011000) at the best available price.

Remember, while your alert will have different details, all the information you need will always be presented, and in the same order, as here. So don’t worry – you’ll know exactly how to set your Exit Strategy up in no time!

Sell: This means that you’re closing an existing position (In fact, as you’ll see, you’re closing the position you just opened.) and that you’re closing your position by selling something (the option you just bought).

USO: Again, this is the ticker of the company that your option is on. Some brokers will call this “the underlying security,” “the underlying stock,” or just “the underlying.” This should always be exactly the same as in the Entry Strategy.

Sept. 30, 2016: As before, this is the expiration date of the option you’re buying, and should match the expiration date given in your Entry Strategy.

$11: This is the strike price of the option you’re selling (and so needs to match the one you bought in your Entry Strategy).

Strike Puts: This tells you the option type you want to trade – either a call or a put.

(USO160930P00011000): This is the option chain – a technical, abbreviated name for the option you’re trading. The option chain includes all the information we’ve discussed above. The letters at the beginning (“USO”) mark the ticker of the underlying stock, followed by the expiration date (“160930” means “2016 Sept. 30”), followed by the option type (“C” for calls, “P” for puts), followed by the strike price (in tens of a cent – “00011000” means $11). Once again, this needs to match the option chain given in your Entry Strategy.

Now let’s take a look at where each part of the Profit-Taking Strategy examples I gave you above go in your options trading screen:

*Anything on your options trading screen that’s not in this list can be safely left at its default setting.*


Item on Your Screen	Action
Symbol	Enter the ticker symbol found in your Exit/Profit-Taking Strategy (in yellow above).
Option/Option Chain	Select the expiration date (in green above), the strike price (in blue above), and option type (in orange above – for this trade it is P for “Put”) in your Exit/Profit-Taking Strategy.
Expiration Date	Select the expiration date found in your Exit/Profit-Taking Strategy (in green above).
Strike Price	Select the strike price found in your Exit/Profit-Taking Strategy (in blue above).
Option Type	Select the option type in your Exit/Profit-Taking Strategy (in orange above – for this trade, it is P for “put”).
Action	Select the first three words of your Exit/Profit-Taking Strategy (in gray above). When setting up your exit strategy, this will typically be “Sell.”
Quantity	You’ll need to choose the exact “Quantity” to sell as you did to buy in your Entry Strategy. The only exception is when your Exit/Profit-Taking Strategy instructs you to “Sell 50%” of the position. In this case, you’ll need to choose half of the exact “Quantity” to sell as you did to buy in your Entry Strategy.
All or None (optional)	If you entered a number higher than “1” under “Quantity,” you’ll want to check the “All or None” box to make sure that either all – or none – of the options you ordered are filled, or none of them are. And if you entered “1” under “Quantity,” you’ll want to move on to the next step.
Order Type Options will include: • “Market” or “Market Price” • “Limit” or “Limit Price” • And others… Your possible exit strategies include: • For 100% gains OR at market by 3 p.m. on (Specified Date) – whichever comes first • For 100% gains or higher. • Sell 50% of the position above: for 100% gains or higher. Await further instructions for the remaining 50% of the position above.	If the end of your Exit/Profit-Taking Strategy mentions “for 100% gains,” then you’ll need to set your “Limit Price” to exactly double the amount you paid to open your position. Just think of it as twice the amount you paid for the trade. If the end of your Exit/Profit-Taking Strategy mentions “for 100% gains or higher,” then you’re really doing the same thing as above, just without an exit date. So again, you’ll need to set your “Limit Price” to exactly double the amount you paid to open your position.’ And finally, if you get instructions from me to “sell 50% of the position above for 100% gains or higher and await further instructions for the remaining 50% of the position above,” then you’ll need to set your “Limit Price” to exactly double the amount you paid to open your position but only for half of your position (see “Quantity” above).
Preview Order/Submit Order	Just like stock trading (or any online shopping, for that matter), you’ll want to click this button to place your trade – but only after you’ve reviewed all of the information you entered. You want to make sure your trade is actually correct before you make your purchase, so to speak. The button that says “Preview Order” will take you to another screen where you can confirm that you’re placing the correct order (compare what’s on your screen to your alert) and then click “Submit Order.”

And that’s it!

You’ve now both entered a put trade and set it up to automatically exit when it hits its profit target.

But we’re not done just yet…

There’s one more type of trade that you may not yet be familiar with but that I’ll be frequently recommending through this service: the Spread Trade (or debit call spread).

I send Spread Trade recommendations whenever I see a trading opportunity during times of high market volatility, which can increase option prices.

That’s where the Spread Trade comes into play…

A Spread Trade reduces your total cost, which in turn reduces your total risk – a double win. And the best part is that a Spread Trade is just as simple to place as put and call trades.

But instead of just telling you how easy it is to place a Spread Trade – and take profits – I’m going to show you using a real Spread Trade alert.

This is actually an old trade recommendation that’s since been closed. So you do not want to actually place this trade. Plus… it wouldn’t work anyway if you tried.

Actions to Take:

BUY-to-Open: GS October 28, 2016, $165 Call (GS161028C00165000) AND SELL-to-Open: GS October 28, 2016, $170 Call (GS161028C00170000) creating a vertical call debit spread for a debit of $2.00 or less.

Profit-Taking Exit: SELL-to-Close 50% of your contracts of GS October 28, 2016, $165 Call (GS161028C00165000) AND BUY-to-Close 50% of your contracts of GS October 28, 2016, $170 Call (GS161028C00170000) for 100% gains. Await further instructions for the remaining 50% of the position above.

And don’t worry if your future Spread Trade alerts don’t look exactly the same. All of the information you need to place the trade is always in the same place in the instructions.

But to really understand exactly how to place a trade like this – and how it could lower your cost, lower your risk, and deliver triple-digit gains – let’s break down what this alert actually means.

You’ll know it’s a Spread Trade when the “Entry Strategy” part of the alert…

Shows both a “BUY-to-Open” action AND a “SELL-to-Open” action, and…
Lists two options with two different strike prices.

Now, your Spread Trade instructions will be split up into two parts: the Entry Strategy and the Profit-Taking Exit. I’ve marked them below in blue and green, respectively.

Actions to Take:

Now, both of these parts are equally important. But since you always need to set up your entry strategy first, we’re going to focus on that part of the alert right now…

Reading the Entry Strategy Section of Your Alert

Here’s a breakdown of our example alert’s Entry Strategy from left to right…

BUY-to-Open AND SELL-to-Open: This means that you’re opening a new position by both buying an option AND selling an option at the same time on the same order ticket.

Goldman Sachs Group Inc. (GS): This is the name and ticker of the company or ETF that your option is on. Some brokers will call this “the underlying security,” “the underlying stock,” or just “the underlying.”

October 28, 2016: This is the expiration date of the option you’re buying. In other words, the option disappears after this date. Now, usually we want to close the position before the expiration date – but I’ll tell you all about that below when we discuss the Stop Loss and Profit-Taking Exit sections.

$165: This is the strike price of the option you’re buying-to-open. Anyone buying a call option with a $165 strike price is buying the right, but not the obligation, to buy the underlying stock or ETF (in our example, shares of GS) at $165 no matter what that stock is really trading at.

$170: This is the strike price of the option you’re selling-to-open. Anyone selling a call option with a $170 strike price is getting some money in return for being obligated to sell the underlying stock or ETF (in our example, shares of GS) at $170 no matter what that stock is really trading at to the buyer of the call when asked to.

But don’t worry about that because the call you’ll be buying (see above) will let you buy that exact number of shares for less than you’ll have to sell them for. That difference between the call you bought (at the lower strike price) and the call you sold (at the higher strike price) will be your profit. And as long as you always buy- and sell-to-open both options at the same time on the same order ticket, you will never actually be obligated to go out and buy/sell individual shares of the stock. Think of options and Spread Trades like renting the stock instead of buying and owning it.

Call: This tells you the option type you want to trade – either a call or a put.

(GS161028C00165000): This is the option chain for the call you’re buying-to-open – a technical, abbreviated name for the option you’re trading. The option ticker includes all the information we’ve discussed above. The letters at the beginning (“GS”) mark the ticker of the underlying stock, followed by the expiration date (“161028” means “2016 October 28”), followed by the option type (“C” for calls, “P” for puts), followed by the strike price (in tenths of a cent – “00165000” meaning $165).

(GS161028C00170000): This is the option chain for the call you’re selling-to-open– a technical, abbreviated name for the option you’re trading. The option chain includes all the information we’ve discussed above. The letters at the beginning (“GS”) mark the ticker of the underlying stock, followed by the expiration date (“161028” means “2016 October 28”), followed by the option type (“C” for calls, “P” for puts), followed by the strike price (in tenths of a cent – “00170000” meaning $170).

For a debit of $2.00 or less: Finally, this sets the limit price – the most you want to pay to enter this trade. I never enter a trade without setting a limit price, and neither should you. After all, what good does the most lucrative pattern do if you pay too much to get in on the trade?

Now, limit prices for Spread Trades are a bit different from what you’ve seen before. For simply buying a call or a put, the price of your trade is simply what you pay for buying the call option or put option – and the limit price is the maximum price you’d want to pay.

For Spread Trades, the price you pay for the trade is the price of buying the call option (with the lower strike price) less what you get for selling the other call option (the one with the higher strike price). That difference is your price – and it shouldn’t exceed the limit price.

For example, let’s say that on our sample trade we recorded an entry price of $1.50 on the GS Spread Trade in this example – $2.50 for the $165 call to be bought minus $1.00 for the $170 call to be sold.

Now, that means you would’ve gotten a 100% profit when the trade reached $2.80.

But say this trade had cost more than the recommended limit of $2.00. If that happened, you wouldn’t have “gotten a fill” on the position – meaning that the order would not be executed. That’s the point of the limit price.

If you didn’t set a limit price, you could’ve ended up getting your order filled at a much higher price, like $2.50. In that event, you would’ve needed the trade to reach $5.00 instead of only needing it to reach $4.00. And that extra dollar is the difference between taking a profit, breaking even, or suffering a loss.

On top of that… I send your entry and exit instructions based on the first actual price recorded after the alert email is sent. So if you didn’t set a limit price and got into the trade at $3.00, exiting your position when it traded at $2.80 (as I would have instructed) would’ve actually resulted in a loss.

That’s why I always enter trades using a limit price…

Now, let’s talk about how you actually place a trade in your broker’s trading platform using all of the information we just went over.

How to Enter Your Alert Instructions

Keep in mind that trading platforms can look different depending on which broker you use. But as long as you can enter all the information below, your trade will be executed exactly as it should.

*Anything on your options trading screen that’s not in this list can be safely left at its default setting*


Item on Your Screen	Action
Symbol	Enter the ticker symbol found in your Entry Strategy (in yellow above).
Option/Option Chain	Select the expiration date (in green above), the strike price (in blue above), and the option type (in orange above – for Spread Trades, this will always either be a “call” or a “put” in your Entry Strategy).
Expiration Date	Select the expiration date found in your Entry Strategy (in green above). Both the option you Buy-to-Open and the one you Sell-to-Open will have the same expiration date.
Strike Price	Select both of the strike prices found in your Entry Strategy (in blue above). For Spread Trades, the strike price for the option you’re buying-to-open will be lower than the strike price for the option you’re selling-to-open.
Option Type	Select the option type in your Entry Strategy (in orange above) – for Spread Trades, this will be the same for both options: either a “call” or a “put.”
Action	Select the first three words of the option you’re buying-to-open and the option you’re selling-to-open of your Entry Strategy (in gray above). Remember: You must buy and sell each option at the same time on the same order ticket to create a Spread Trade.
Quantity	Select the number of options you want to both buy and sell. Remember: You must buy and sell the same number of options in order to create a Spread Trade. Exactly how many is entirely your choice, but I recommend spending no more than between 2% and 5% of your money on any one trade.
All or None (optional)	If you entered a number higher than “1” under “Quantity,” you’ll want to check the “All or None” box to make sure that either all – or none – of the options you ordered are filled. If you entered “1” under “Quantity,” then move on to the order type.
Order Type Options will include… • “Market” or “Market Price” • “Limit” or “Limit Price” • And others.	If the end of your Entry Strategy mentions a “limit” (see above in red), then choose “Limit” on your screen, and enter the limit amount from your alert (also in red) in dollars. In our GS example, you would select “Limit,” and enter $2.00. If instead of mentioning a “limit,” the end of your alert mentions “at market,” then choose “Market” on your screen. But remember: Entering a trade without setting a limit price is always a very bad idea. Note: In some cases, setting a low limit may mean that your trade never gets executed because you’re trying to buy an option at a price that’s below what everyone is selling it for. In such cases, you may want to use your trading platform (or call your broker) to “cancel” the order you put in.
Duration/ “Time in Force” Options will include… • “Day Order” • “Good until Canceled” • And others.	If your Entry Strategy mentions placing the order as a “day-only order,” then you’ll need to choose the “Day Order” option on your screen. When you enter “Day Order,” your trade is automatically canceled if it isn’t filled by the end of that trading day. Otherwise, always choose the “Good until Canceled” option. (It may also be called “GTC,” “Good-’Til-Cancel,” or other phrases like that.)
Preview Order/Submit Order	Just like stock trading (or any online shopping for that matter), you’ll want to click this button to place your trade – but only after you’ve reviewed all of the information you’ve entered. You’ll want to make sure that your trade is actually correct before you make your purchase, so to speak. The button that says “Preview Order” will take you to another screen where you can confirm that you’re placing the correct order (compare what’s on your screen to your alert), and then click “Submit Order.”
Routing	No special routing required.

Basically, for Spread Trades you’re placing a single trade with two “legs” or actions: One is a BUY-to-Open on a call option, and the other is a SELL-to-Open on a call with the same expiration date, on the same underlying security, but with a higher strike price.

Now, it is crucial that you place both “legs” of this trade on the same order ticket. In other words, don’t place your Spread Trades as two separate trades – you’ll end up with much higher commissions and higher risk to boot.

That’s it! Congratulations, you’ve successfully “placed” your first Spread Trade.

But before you can sit back, relax, and watch your money roll in, there’s one more thing you need to know…

Reading the Profit-Taking Exit of Your Alert

Before you can actually collect your profits, you need to exit your trade. In order to do that, you need to set your Profit-Taking Exit. Having your exit in place ensures that you get out of your trade – automatically – without having to spend your entire day in front of the computer. I’m sure you’ve got much better things to do…

So let’s break down the Exit Strategy section of our example GS alert…

Remember: While your alert will have different details, all the information you need will always be presented to you – and in the same order as above. So don’t worry – you’ll know exactly how to set your Exit/Profit-Taking Strategy up in no time!

SELL-to-Close: This means that you’re closing an existing position (in fact, as you’ll see, you’re closing the position you just opened) and that you’re closing your position by selling something (the option you just bought). Remember: A Spread Trade consists of two options. That means you’ll need to sell-to-close the option you bought-to-open. You’ll also need to…

BUY-to-Close: A Spread Trade consists of two options: one you buy-to-open and one you sell-to-open. Now, you’ve already taken care of the option you bought by selling-to-close.

But you also need to take care of the option you sold in order to completely close your Spread Trade – and you do that by buying-to-close. Remember: You need to sell-to-close and buy-to-close at the same time on the same order ticket in order to close the trade.

Goldman Sachs Group Inc. (GS): Again, this is the name and ticker of the company or ETF that your option is on. Some brokers will call this “the underlying security,” “the underlying stock,” or just “the underlying.” This should always be exactly the same as in the Entry Strategy.

October 28, 2016: As before, this is the expiration date of the option you’re buying and should match the expiration date given in your Entry Strategy.

$165: This is the strike price of the option you’re selling-to-close (the same option you originally bought-to-open).

$170: This is the strike price of the option you’re buying-to-close (the same option you originally sold-to-open).

Call: This tells you the option type you want to trade – either a call or a put. Remember: Both options in your Spread Trade must be the same – either calls or puts.

(GS161028C00165000): This is the option chain for the call you’re buying-to-open – a technical, abbreviated name for the option you’re trading. The option chain includes all the information we’ve discussed above. The letters at the beginning (“GS”) mark the ticker of the underlying stock, followed by the expiration date (“161028” means “2016 October 28”), followed by the option type (“C” for calls, “P” for puts), followed by the strike price (in tenths of a cent – “00165000” meaning $165).

(GS161028C00170000): This is the option chain for the call you’re selling-to-open – a technical, abbreviated name for the option you’re trading. The option chain includes all the information we’ve discussed above. The letters at the beginning (“GS”) mark the ticker of the underlying stock, followed by the expiration date (“161028” means “2016 October 28”), followed by the option type (“C” for calls, “P” for puts), followed by the strike price (in tenths of a cent – “00170000” meaning $170).

50% of the position above: This means that instead of closing your full position (100%), you’re only going to close half of your position (half of the “Quantity” you entered for your Entry Strategy – if it was more than “1”) for the price target mentioned in the alert. In this example, you’re closing 50% of your position once you reach your profit target of 100% gains (twice what you paid to open your position). This means that 50% of your trade will still be open, which allows you to basically capture profits twice on the same trade. Think of it like a two-for-one deal.

Await further instructions for the remaining 50% of the position above: This simply refers to the other half of your position that’s still open. And all it means is that I will send you an alert with exit instructions as soon as it’s time to close the position. So there’s no date or price limit you will set through your trading platform.

At market: This tells you that you need to exit your Spread Trade immediately. This means that you need to get out of the trade no matter what price it’s trading at.

If we’ve previously only closed 50% of our Spread Trade, you will typically see the following Exit/Profit-Taking Strategy for the remaining 50%…

Exit Strategy:

SELL-to-Close: (GS) October 28, 2016, $165 Call (GS161028C00165000) AND BUY-to-Close: (GS) October 28, 2016, $170 Call (GS161028C00170000) for 100% gains OR at market by 3 p.m. on Friday, October 27 – whichever comes first.

For 100% gains or higher: This part shows you the profit potential I expect the trade to have. It also tells you where you should set your profit target through your trading platform to automatically close your position.

Now in this example, suppose you opened your position using the Entry Strategy I showed you above. That would mean that you got your order filled below the limit price of $2.00. So when the Exit/Profit-Taking Strategy tells you to exit the position for “100% gains or higher,” it means you’ll be having your broker close your position when the value of your trade has gained exactly that much – 100%. Just think of it as twice the amount you paid for the trade ($1.50). So you’d want to exit for 100% gains at $3.00.

OR at market by 3 p.m. on Friday, October 27 – whichever comes first: This tells you exactly when to exit your trade manually if it never reaches the profit target I mentioned above.

The other Exit/Profit-Taking Strategy you’ll see from me frequently is similar to the one above, but you’ll be closing your position by a specified date (instead of closing half of your position).

That’s all you need to know in order to set up your Spread Trade to automatically close when it reaches its profit target. Just take the information from your Exit Strategy (broken down above) and enter it into the specified part of your broker’s trading screen, as shown in the table below.

And remember: Trading platforms used by different brokers may vary slightly from what you see below. But as long as you can enter all the information below, your trade will exit exactly as it should.

Now, let’s take a look at where each part of the Exit/Profit-Taking Strategy examples I gave you above go in your options trading screen…

*Anything on your options trading screen that’s not in this list can be safely left at its default setting*


Item on Your Screen	Action
Symbol	Enter the ticker symbol found in your Exit/Profit-Taking Strategy (in yellow above).
Option/Option Chain	Select the expiration date (in green above), the strike price (in blue above), and the option type (in orange above – for Spread Trades, this will always either be a “call” or a “put”). You’ll need to select the expiration date, strike price, and option type for both the option you’re selling-to-close and the option you’re buying-to-close.
Expiration Date	Select the expiration date found in your Exit/Profit-Taking Strategy (in green above).
Strike Price	Select the strike prices found in your Exit/Profit-Taking-Strategy (in blue above). Remember: For a Spread Trade, you’ll have two strike prices to select – one for the option you’re buying-to-close and one for the option you’re selling-to-close.
Option Type	Select the option type in your Exit/Profit-Taking Strategy (in orange above). For Spread Trades, both options will be the same: either a call or a put.
Action	Select the first three words of your Exit/Profit-Taking Strategy (in gray above) for both the option you’re buying-to-close and the option you’re selling-to-close. Remember: You need to buy and sell each option at the same time on the same order ticket in order to close a Spread Trade.
Quantity	You’ll need to choose the exact “Quantity” to sell as you did to buy in your Entry Strategy. The only exception is when your Exit/Profit-Taking Strategy instructs you to “SELL-to-Close 50%” of the position. In this case, you’ll need to choose half of the exact “Quantity” you entered when opening the trade. Of course… if you only entered one, then you’ll be selling-to-close the entire position.
All or None (optional)	If you entered a number higher than “1” under “Quantity,” you’ll want to check the “All or None” box to make sure that either all – or none – of the options you ordered are filled. And if you entered “1” under “Quantity,” you’ll want to move on to the next step.
Order Type Options will include… • “Market” or “Market Price” • “Limit” or “Limit Price” • And others.Your possible exit strategies include… • For 100% gains OR at market by 3 p.m. on (specified date) – whichever comes first. • For 100% gains or higher. • SELL-to-close 50% of the position above: for 100% gains or higher. Await further instructions for the remaining 50% of the position above.	If the end of your Exit/Profit-Taking Strategy mentions “for 100% gains or at market by 3 p.m. on (specified date) – whichever comes first,” then you’ll need to set your “Limit Price” to exactly double the amount you paid to open your position. Just think of it as twice the amount you paid for the trade. If the end of your Exit/Profit-Taking Strategy mentions “for 100% gains or higher,” then you’re really doing the same thing as above, just without an exit date. So again, you’ll need to set your “Limit Price” to exactly double the amount you paid to open your position. And finally, if you get instructions from me to “sell-to-close 50% of the position above for 100% gains or higher and await further instructions for the remaining 50% of the position above,” then you’ll need to set your “Limit Price” to exactly double the amount you paid to open your position, but only for half of your position (see “Quantity” above).
Preview Order/Submit Order	Just like stock trading (or any online shopping for that matter), you’ll want to click this button to place your trade – but only after you’ve reviewed all of the information you entered. You’ll want to make sure that your trade is actually correct before you make your purchase, so to speak. The button that says “Preview Order” will take you to another screen where you can confirm that you’re placing the correct order (compare what’s on your screen to your alert), and then click “Submit Order.”
Routing	No special routing required.

And that’s it! You’ve now both entered a Spread Trade and set it up to automatically exit when it hits its profit target.

Congratulations! You’ve taken the few simple steps that separate real traders from the rest of the investment herd – and that separate life-changing profits from being subject to the whims of Wall Street.

There’s just one last thing I suggest…

Practice Trading in a Virtual Trading (or Paper Trading) Account

Sometimes, the most challenging part of trading options is actually pulling the trigger. So what I suggest doing is placing your first few trades using your broker’s “virtual trading” or “paper trading” system. These allow you to enter, follow along, and exit a trade as per usual but without actually using any money.

Now of course, that also means you can’t make any money. But it’s a great way to get acquainted with options in general and your broker’s platform in particular. I recommend that all my readers use paper trading until they get comfortable – in fact, I wish I’d used it back when I first got started with options.

And remember: If at any point you’re not sure what to do, never hesitate to contact your broker. As a customer, they owe you time on the phone to make sure you’re buying the option you want to buy.

Here are the phone numbers to Schwab, TD Ameritrade, and Fidelity…

For Schwab, call (800)-435-4000
For TD Ameritrade, call (800)-669-3900
For Fidelity, call (800)-343-3548

Just read them the original Entry and Exit/Profit-Taking Strategies you received, and they’ll be able to tell you how to enter your trade correctly.

You can also look at each brokers’ “Frequently Asked Questions” page on their website, which will include an explanation of how to use their trading platform (or who to contact to find out)…

For Schwab, go to: www.schwab.com/public/eac/resources/faqs.

For TD Ameritrade, go to: www.tdameritrade.com/education/account-types-and-investment-products/how-to-trade-options.page.

For Fidelity, go to: www.fidelity.com/customer-service/faqs-accounts-trade-summary.

Great trading and God bless you,

D.R. Barton, Jr.