An option is a contract that entitles the buyer to buy call or sell put a predetermined quantity usually shares of an underlying security for a specific period of time at a pre-established price. It is called a derivative investment, since the value of the option is derived from the price of the underlying security.
In order to trade options, we require a signed options application by all parties on the account. Otherwise, you may request an application through e-mail or via the telephone. Options are very risky derivative securities, the leveraging power of stock option investing can generate considerable returns, or lead to significant losses.
For your protection, we require investors to submit an application for options trading. While Firstrade requires no minimum balances to open an account or invest in equity securities, we do require minimum balances in order to place certain option orders. The following table lists the option strategy and the minimum equity required to place option orders:.
You cannot write uncovered naked calls because of the high levels of risks involved. For example, if you write a naked call and the price of the underlying security rises, there's no limit as to how much you can potentially lose if the stock keeps rising. Two-legged complex option orders are charged a single commission but contract fees are charged on each leg. To exercise your option contract, simply send us an e-mail detailing which option contract you would like to exercise.
Please provide your first and last name, Firstrade account number, the number of contracts you would like to exercise, the symbol, month, and strike price of the contract to exercise. Firstrade reserves the right to close an option position that may be subject to exercise or assignment, depending upon account equity and market conditions.
Exceptions are those options whereby the related security or index is in the Penny Pilot Program. Want to speak with someone regarding basic questions in real-time? Try our interactive live chat service. One of our representatives can provide assistance with your inquiries. Get credit for the account transfer fee charged by other brokers, and start taking advantage of our premium products and online trading services when you transfer to Firstrade! What is an option?
The following table lists the option strategy and the minimum equity required to place option orders: Transfer to us for Free Get credit for the account transfer fee charged by other brokers, and start taking advantage of our premium products and online trading services when you transfer to Firstrade!
Online trading has inherent risk due to system response and access times that may vary due to market conditions, system performance, and other factors. An investor should understand these and additional risks before trading. Carefully consider the investment objectives, risks, charges and expenses before investing. All investments involve risk and losses may exceed the principal invested.
Past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. Firstrade is a discount broker that provides self-directed investors with brokerage services, and does not make recommendations or offer investment, financial, legal or tax advice. Options trading involves risk and is not suitable for all investors.
Options trading privileges are subject to Firstrade review and approval. Please review the Characteristics and Risks of Standardized Options brochure before you begin trading options. Investors should consider the investment objectives, risks, and charges and expenses of a mutual fund or ETF carefully before investing. Leveraged and Inverse ETFs may not be suitable for long-term investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.
A mutual fund or ETF prospectus contains this and other information and can be obtained by emailing service firstrade. Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. The Margin Disclosure Statement and Agreement PDF is available for download, and contains information on our lending policies, interest charges, and the risks associated with margin accounts.
See our Pricing page for detailed pricing of all security types offered at Firstrade. All prices listed are subject to change without notice. Any specific securities, or types of securities, used as examples are for demonstration purposes only. None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security. This is not an offer or solicitation in any jurisdiction where Firstrade is not authorized to conduct securities transaction.
System response and access times may vary due to market conditions, system performance, and other factors.More...