How to Trade Options

Regardless of your trading objective, you'll need a brokerage account that's approved to trade options in order to proceed with any strategy involving options. The types of options trades you can place also depend on your specific options approval level. Talk to a Schwab specialist at 888-245-6864 to learn more.

Now that you've identified your primary objective, what other characteristics of an option or underlying security are you looking for? Filtering the field based on price, volume Tooltip Volume can refer to the number of shares traded in a security, or the number of options contracts traded, over a period of time. , implied volatility Tooltip Implied Volatility (IV) is derived from an option's price and reflects the marketplace's expectation of the underlying's volatility in the future. , sector, or other parameters can narrow the universe of trades down to a manageable set of ideas.

Schwab has tools to help you find potential options trade ideas:

Once your options position has been established (opened), it's wise to keep an eye on its value and trend to help know what to do as it approaches expiration.  

If you bought an option, depending on what the price of the underlying asset is, you may decide to sell the option before it expires, exercise the option and buy or sell the underlying security, or allow the option to expire worthless.

If you sold an option, you can choose to buy the option back (to close the position) or allow the option to expire worthless. You could also be required to take assignment by buying or selling the underlying security. 

Schwab's options charts feature studies to monitor an option's volatility and trend over time. You can even close existing positions directly from the chart. And our options specialists are ready to answer questions or help close your position.