Chapter 5 - How to view and trade options
Disclosure:
Options involve risk and are not suitable for all investors. Certain requirements must be met to trade options. Before engaging in the purchase or sale of options, investors should understand the nature of and extent of their rights and obligations and be aware of the risks involved in investing with options. Prior to buying or selling an option, clients must receive the options disclosure document "Characteristics and Risks of Standardized Options." Call the Investment Center at 877.653.4732 for a copy. A separate client agreement is needed.
Options carry a high level of risk and are not suitable for all investors.
If you're interested in trading options, this video is for you. We'll demonstrate how to customize your option chain and place trades with Merrill Edge MarketPro.
The option chain by default will add "Calls" on the left and "Puts" on the right. You can also customize the options chain by strategy or by displaying calls or puts only. It can be done by selecting calls and puts on the upper left hand side of the window and choosing your desired display.
You can filter your selection by clicking on the funnel icon.
Once the "Option Filter" window appears, you can adjust the strikes displayed, select the expirations to be shown, and further customize your view.
To change the number of strikes displayed, select "Strikes" and change the number displayed. Once you are finished customizing, click "OK."
In this view, we have calls on the left of the screen, puts on the right, and the corresponding strike prices in the middle sorted by expiration.
A green cell indicates that a particular strike price is in the money.
A yellow cell indicates the strike price is near the money. You can choose how many contracts appear in yellow or even remove the "Near the Money" indication entirely from the filter window.
A red cell indicates that a particular strike price is out of the money.
To expand or collapse an expiration, double-click the caret to the left of the expiration date.
You can also select or deselect an expiration date at the top of the window.
To add a column to your option chain, simply right-click on a header and select "Insert Column(s)."
Click on the title of the column you would like to add. Hold "control" and click on multiple columns to add more than one at a time.
In this example, we will add delta and implied volatility. Select "OK" to return to the option chain.
Columns can be resized or dragged and dropped to different locations.
Once you have your option chain set up just the way you like it, right-click to save this set up as your default. Just hover over "Defaults" and select "Save Option Chain Properties As Default."
To place a trade directly from the options chain, right-click on the specific contract and select the desired action.
In this example, we will buy to open ten contracts using a limit order.
The trade ticket will appear at the bottom of the screen with the fields pre-filled. Then, you'll fill out the quantity, duration, order type, and limit price. Then you're all set to preview and place your order.
If you're looking for additional options education, check out the Options Play tool.
We've got short tutorials on several other tools and experiences within Merrill Edge MarketPro, so take a look.
And thanks for watching.
Disclosure:
Please remember there's always the potential of losing money when investing in securities.
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Options involve risk and are not suitable for all investors. Certain requirements must be met to trade options. Before engaging in the purchase or sale of options, investors should understand the nature of and extent of their rights and obligations and be aware of the risks involved in investing with options. Prior to buying or selling an option, clients must receive the options disclosure document "Characteristics and Risks of Standardized Options." Call the Investment Center at 877.653.4732 for a copy. A separate client agreement is needed.
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