How to Open an Options Trading Position
The web-based easyMarkets vanilla options platform has three trading modes: New to Options, Basic and Advanced. You choose a mode depending on your experience.
Trading in New mode
In the New mode, you have a choice to either buy a PUT or buy a CALL. The trade tickets have a fixed strike rate, amount, and expiry date. The expiry is set to 7 days, so you may buy a PUT or CALL depending on your outlook of the trend over the next week. When you click ‘Trade now’, a position is opened and the premium amount is debited from your free balance.
To build your own option, click the link ‘create my own trade’ and you will enter the Basic trading mode.
Trading in Basic mode
The Basic mode allows you to choose the strike rate, expiry, and amount. These parameters affect the cost to buy an option, i.e. the option’s premium value. Long-dated options are more expensive, you could view this as buying yourself more time. An option with larger amount, as with any investment, means exposure to higher gains or losses and the option will be more costly. As a default, the strike rate is set to 0%. A 0% strike rate equals the underlying market rate at the time of execution. You can change the strike rate before execution and this will affect the cost of the option. In the next lesson, we discuss the strike in more detail.
