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How To Buy Options on Webull

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Over the past decades, investing in the stock market has become more accessible than ever due to lower fees and greater access to markets around the world.

Along with this technological evolution, more and more financial content about the market has been disseminated on the internet. This not only increases the opportunities to learn about the market but also provides valuable insights into lesser-known and more complex instruments such as options.

Trading options is very different than simply trading stocks, but when done correctly, traders can make much higher profits with less buying power than stocks. I’ve been trading options and stocks for the past 5 years and although they’re difficult to get started with, they’re a great way to grow your capital.

I’ve attended hundreds of hours of professional options trading courses and have extensive experience trading the market myself. In this article, I’ll share all my experiences with you and explain the basics of what options are, what different categories of options there are, how options are priced, and much more.

Finally, we’ll also talk about how to open an account and trade options on Webull, one of the most popular trading platforms for stocks and options.

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Webull is a free investing app that provides advanced reporting tools and allows you to make free trades of stocks, ETFs, and options. Right now Webull is offering up to 12 free stocks when you signup through our link (use the button below) and deposit ANY AMOUNT!

Features:
  • Get 5.0% APY on Webull Now!
  • Commission-free trades of stocks, ETFs, options, and cryptocurrency
  • Buy fractional shares for any amount
  • Extended trading hours
  • Advanced reporting tools
  • IRAs now available
  • 24/7 customer service

What Are Options

Options are financial instruments whose price depends, among other things, on the price of an underlying asset. In the U.S., for example, a single stock option contract is a financial instrument whose price depends on the price of a group of 100 shares of the underlying company.

As we’ll see in a moment, however, options are much more complex than that. Options prices depend on many factors and there are many different types of options contracts, so any trader, even the most experienced, must be extremely careful when trading these financial derivatives.

In particular, when trading stock options, a trader must be aware that each contract tracks the movement of 100 stocks, so both losses and gains are extremely amplified, allowing traders to make such a profit with only a fraction of their bet.

Options Pricing Structure

Options are financial derivatives, that is, they’re financial instruments whose price also depends on the price of an underlying asset. But it’s also important to know that there are many other factors that affect the price of options.

Even though the price of the underlying stock is the most important element in determining the option price, there are other parameters that have a significant impact, such as the strike price, the “Days To Expiration” (DTE), the implied volatility (IV), and the “Greeks,” a group of parameters that monitor the price changes of the contract.

The strike price is the price set as the target when the options are purchased and is the only parameter used to determine whether the options expire in-the-money (ITM) or out-of-the-money (OTM) at expiration. An option expires ITM if it records a profit on the expiration date, while it expires OTM if it instead records a loss.

The days to expiration are extremely important to the price of a contract because the price is based on the probability of closing in the money (ITM). The more DTE, the greater the probability that a stock will close in the money, and the higher the price.

Volatility is also important because even if the current price is very far from the strike price, if the stock is very volatile, it’s more likely to reach it. Volatility is measured by the implied volatility indicator (IV), and the higher the IV is, the higher the price of the contract.

Finally, the Greeks have the following five parameters:

  • Delta: Delta measures the change in the option price relative to the change in the underlying stock price. Thus, if delta is 0.8, it means that the option price increases by $0.80 for every dollar that the value of the underlying stock increases. In addition, delta measures the probability that the option contract will expire “in the money” (ITM). The higher the delta, the more expensive the options will be.

  • Gamma: Gamma, also known as the delta of the delta, measures the change in the delta for a $1 movement in the underlying stock price. It’s basically the first derivative of delta and measures how fast it changes. Again, the higher the gamma, the more expensive the options.

  • Theta: Options are time-depreciating assets, meaning that the value of the options decreases over time. The theta of an option measures how much the value of the contract decreases each day. It’s important to know that time decay is exponential. The lower the DTE, the higher the time decay.

  • Vega: Vega measures the change in the price of options for a 1% change in implied volatility (IV). So if an option has a value of $1.50, Vega shows 0.1. If IV increases from 20% to 21%, the value of the option increases to $1.60. Again, the higher the Vega, the higher the price of the contract.

  • Rho: Rho, on the other hand, is the Greek value that has the least impact on pricing because it’s almost always constant, and changes are unlikely to have a significant impact on the price of the options. Rho measures the change in the option price due to a 1% change in interest rates.

Calls Vs Puts

There are two main categories of options contracts: Call and Put options. A call options is a contract that gives the buyer the right, but not the obligation, to buy 100 shares of stock at a strike price on or before the expiration date. For this reason, call contracts are purchased when a trader is “bullish” on the stock, i.e., believes the price is likely to rise.

A put option, on the other hand, is a contract that gives the buyer the right, but not the obligation, to sell 100 shares at a strike price on or before the expiration date. Thus, a trader would purchase a put option if he considers a stock to be “bearish,” that is, if he believes the price is likely to fall.

In addition, it’s also possible to sell both call and put options, but such actions are much riskier than buying options for a simple reason. A call seller (also called a call writer) is obliged to sell the stock to the call buyer at the strike price, and a put seller (also called a put writer) is obliged to buy the stock from the put buyer at the strike price.

So in both cases, there is no right, only the obligation, so the sellers always depend on the decisions of the buyers and might be forced to buy or sell 100 shares. So while the buyers risk only the amount they spent to buy an option contract (limited risk) and have an unlimited return, the option sellers have unlimited risk and limited return (the amount paid by the option buyer).

For this reason, options are generally sold only as part of an options trading strategy that consists of buying or selling more than one option contract of the same underlying at a time to hedge against the risks associated with selling a contract.

European Vs American Options

Another major difference between options contracts is whether they’re European or American options.

American options are contracts that can be exercised before the expiration date, i.e., the holder can exercise his right to buy/sell the 100 underlying shares at the strike price on or before the expiration date.

European options, on the other hand, can only be exercised on the expiration date, making it impossible for the holder to buy/sell 100 shares before the expiration date.

For this reason, American options are more desirable for owners and carry more risk for the seller, as he may be forced to buy/sell his shares. Therefore, American options often have a higher “premium” (another term for the price of an option contract).

However, it’s important to know that the type of option has nothing to do with the market in which the underlying company is listed, but only with the exercise rights. For example, most indexes in the U.S. assume the exercise rights of European options.

How To Buy Options On Webull?

Nowadays, there are many different trading platforms where you can trade options. But over the years, Webull has become one of the most respected and widely used brokers around the world.

Although options trading is much more complex than stock trading and usually involves higher exchange fees, options traders can simplify this process and minimize the fees thanks to their Webull account.

1. Open A Webull Account

The first step is to open a Webull account. This process, as with many other brokers, has become very fast and can be completed in just a couple of business days. This requires filling out a few forms regarding country of residence, household income, employment status, marital status and more.

Then you need to upload a “proof of address” (POA) and a “proof of identity” (POI). A POA can be a certificate of residence, utility bill or bank statement, while a POI can be either a passport, ID or driver’s license.

Commission-Free Trades
Get Up to 12 Free Stocks from Webull! Get Up to 12 Free Stocks from Webull!

Webull is a free investing app that provides advanced reporting tools and allows you to make free trades of stocks, ETFs, and options. Right now Webull is offering up to 12 free stocks when you signup through our link (use the button below) and deposit ANY AMOUNT!

Features:
  • Get 5.0% APY on Webull Now!
  • Commission-free trades of stocks, ETFs, options, and cryptocurrency
  • Buy fractional shares for any amount
  • Extended trading hours
  • Advanced reporting tools
  • IRAs now available
  • 24/7 customer service

Additionally, either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN) is required.

2. Fund The Account

The second step required to access the trading platform and start trading stock options is to deposit money into the account. There are many methods to transfer money to your Webull platform, but the cheapest and fastest method is an ACH transfer, as it’s instant and free.

Alternatively, you can fund your account with a domestic wire transfer for $8 or an international wire transfer for $12.5 if you have a bank outside the US. However, it’s important to note that these two methods usually take more time, as a domestic wire transfer can take up to 3 business days and an international wire transfer can take up to 7 business days.

Also, there is no minimum deposit at Webull, so everyone can deposit as much as they want. However, it’s important to look out for promotions as there are often free shares when a new trader deposits more than a certain amount.

Also, once an account is opened and activated, it’s possible to transfer shares from another broker to your Webull account for free.

3. Carry Out A Research And Identify The Buy Opportunity

Because even the most basic option trading strategies can generate quite a significant risk, it is always important to carry out a thorough research before executing the trade.

Just like with stock trades, it is important to use technical indicators and to look at the stocks details page to minimize the risks associated with the trade.

Additionally, if you are feeling unsure about how to trade options on Webull or on how the platform works, Webull also offers a paper trading account, allowing you to access the options market and get accustomed to it.

4. Purchase The Options And Monitor Your Trade

Finally, the last step is purchasing (or selling) the option strategy that you think is profitable based on your research.

However, before you press “continue” on the summary page that opens after you click “Buy” or “Sell,” it’s important to carefully read any exercise fees and contract fees that may apply to your trade.

If the fees for the trade are also satisfactory and they don’t significantly affect profitability, then click on continue and submit the order. When the order is executed, you’ll see your first options trade in your portfolio.

The last thing you need to do is monitor the position and make sure the trade is going in your favor, while looking for the best opportunity to close the position and make a nice profit!

Final Thoughts

Options trading is tough; it really is. But I hope that, with this article, I managed to cover everything you should know before starting.

There are many different parameters to consider when opening an options trade. Moreover, all the parameters vary not only in time but also at different speeds, so the trader has even more to manage.

I recommend that as a complete beginner, it’s best to take an options trading course and open a paper trading account with Webull or another broker to familiarize yourself with this financial instrument.

If you’re an experienced trader instead, I’d recommend you to look into more advanced options trading strategies such as credit and debit spreads, calendar spreads, iron condors and many others. Although these strategies may seem difficult and riskier, they’re extremely helpful in limiting risk and increasing profits.


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  • IRAs now available
  • 24/7 customer service
  • Commission-free trades of stocks and ETFs
  • Buy and sell 25+ different cryptocurrencies
  • Fractional shares
  • Access alternative investments
  • High-yield treasuries accounts
  • Social community of investors
  • User-friendly interface
  • Commission-free trades of stocks, ETFs, options, and ADRs
  • Powerful screening and charting tools
  • Free real-time level 2 data
  • User-friendly mobile app
  • AI monitoring
  • AI-powered price forecasts
  • Free investing courses
  • Commission-free trades of stocks, ETFs, options, and cryptocurrency
  • Buy fractional shares for any amount
  • Extended trading hours
  • Advanced reporting tools
  • Schedule recurring investments
  • IRAs now available
  • 24/7 customer service

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