To get things started, we’re going to take a look at the panel over here.
Choose a Stock
What you want to do is first — choose your stock. I’m going to go pick McDonald’s in this example. I’m going over here in the trade tab area.
Let’s go to McDonald’s. So I will go ahead and type in MCD and there’s McDonald’s corporation.
You’ll notice that you have two kind of areas.
Left side – Call area
Right side – Put area
You also have the days until expiration.
So here you’ll see all of these different days and the actual date. You could choose your duration because options expire. Let’s say you want to go about 58 days. That’ll open up my trade grid.
This trade grid still has your calls on the left and puts on the right. When you look at this trade grid here, you might only have 4 strikes that’s right here.
These two right here this would be your Out-of-The-Money area (OTM).
The blue area this will be In-The-Money (ITM). It works kind of opposite diagonally when you’re looking to put this trade on. So let’s say you believe this stock is going to up to 200.
The current stock price on McDonald’s is 184.
What you could do is you could put a call option on McDonald’s. You go to the 200 strike price and you’re willing to pay right here two dollars.
I will just go ahead and right click and buy.
This is the simplest approach and then it gives you a direct view of doing it. There’s no issues or errors because I could click almost anywhere and I get that menu.
You could also actually just click the actual ask or the bid. But I find some people have a confusing problem with this.
The reason for that is when you click the bid it’ll convert it into selling.
When you click the ask, you’ll get the buying.
So if you just right click it uh you will get that menu buy or sell and and then you can work from there. You’ll just go to buy and let’s go to the 200 you’ll buy a single and that’ll put that up.
Just send the order and all you need to do is right click confirm and send and that’ll pop open this dialog box.
What I like to do first is go ahead and right click anywhere on this trade and go to analyze the trade.
It’ll put it in this analyze area then the risk profile
It kind of looks like a trade grid. You’re in the ad simulated trades area. You want to make sure you’re in the analyze section and then click risk profile.
That’ll change it to a graph that’s kind of like this.
Here is our call option that we’ve purchased at the 200. You have two lines here. The white line is the T+0 line. It is the two day line and you can see it right here.
It tells you when they kind of expire. There’s that white line and there’s the green line.
Can you change these colors? Absolutely. Just click the date right here.
In this case, the green line is at expiration. So that means your 30 or 40 or 58 days out, however far you purchase your option contract.
Because I’m a buyer, I am paying two dollars, which means every contract right here controls 100 shares.
This is a 200 trade so if I right click and confirm and send, you can see I’m paying the cost of the trade is 200 plus your commissions.
That gets you your final value or cost. So in either case, this is the way that you would do it to place the trade.
If the stock price goes up to 200, let’s say in the next day, I would be up about 530 dollars.
Greeks
Here’s your all your Greeks here towards the bottom.
The delta tells you for every dollar move, it is how much you will make or lose. That basically means it’s about a 20 share stock equivalent.
If this goes up a dollar theoretically, I’ll make about 13.29.
Let’s say I go up another dollar, you’ll add about 20 dollars to the 13.29 dollars.
The theta here tells you the time value. Every option contract loses money when it comes to time if you’re a buyer. In our case we are a buyer of this option contract which means we lose four dollars and 4.41 dollars every day.
If I move this time forward 4 days, you can see this profit and loss starts to go down.
You lose about 4 dollars every day. So that’s what that really tells you. That’s kind of the basics behind to put the order in. You’ll see that it probably will get filled as long as you’re kind of in this range of this mark and price.
What’s going to happen with the trade, it’ll fill and then it’ll get put kind of in your trade area over here.
Anyways, I hope this was helpful and you got some insight from learning about the basics of how to buy a single call options.
