Knowing the basics of buying and selling stock is the first step to learning options. In the first level, we’ll get up to speed on what long and short mean and then discover the foundation that all trades are based on.
Now that we learned a little about stocks in Level 1, we will introduce options and what makes them different than stocks in Level 2. We’ll learn about the two different kinds of options, we’ll learn some new terms, and then we’ll look at a couple of ways option trades can play out.
Calls and puts are options with similar conditions, but different mechanics. Level 03 covers the Four Basic Option Trades, buying and selling calls and puts, so that you’ll be ready to create strategies with them later. We’ll learn how buying and selling options are different, how each basic trade wins, how each one loses, and how we can keep them straight as we learn to trade.
Learning about buying and selling calls and puts was just the beginning of how to place actual trades. In Level 4, we’ll introduce ourselves to dough, learn what to look for in a trade, and learn how to sell cash-secured puts and covered calls, two basic strategies that help us cross the bridge from trading stock to trading options.
If you have trouble understanding that being "short" does not mean you need a trading booster chair, this supplement to the Stock Options Explained with Rachel Fox is for you. Each level we release will be accompanied by these additional Trading Vocabulary quickies to help you understand the terms of Options Trading.