How Do I Sell Options on TradeStation?

Selling options on Tradestation is easy. In this article, we show you how and provide you with other important information about Tradestation to help you along your journey.

What Are Options?

Options are security types that give a trader rights to buy and sell underlying assets. These assets are usually stocks and you can trade them on various futures and ETFs. There are two different option types: call options and put options.

Call and Put Options

A trader can buy or sell options or do both to trade options. Put and call options are contracts used between buyers and sellers. If you decide to hold your options until they expire, you will have different obligations and rights, whether you are a buyer or seller. When you buy an option, you can decide whether you want to remain the stock owner. When selling options, stock can be assigned to you.

Trading Options Have Expiration Dates

In addition, if you trade an option with value by its expiration date, there may be some actions you need to take. For example, with calls when entering a trade by buying, a trader is not obligated but has the right to buy, whereas a seller entering a trade may be assigned the obligation to provide long shares. With puts, a buyer is not obligated but can sell short, whereas a seller may be obligated to provide short shares if assigned.

How Premium or Price Option Contracts Are Determined

Generally, options contracts each represent 100 stock shares. The following factors determine the option contract premium or price:

• The strike price in the contract for buying or selling stock.
• The underlying stock price.
• Volatility.
• The contract's expiration date.
• Stock interest rates and dividends to a lesser degree (when applicable).
• The quoted price for the stock option or the per-share option price.
• Economic or related news events may also significantly affect the option's price.

Placing a Trade In Option Chains Panel

In the Options section, you will find the Option Chains Panel. Here you can find available spreads and options to trade. Access this section, in Option Station Pro, by clicking on Options.

There are several methods to place trades using the Option Chains section:

• If you want a Put or Call option, click on the Ask price next to the intended Strike.
• To sell a Put or Call option, click the Bid price next to the intended Strike.
• Right-click on the Ask or Bid column and choose Buy or Sell.
• Open the drop-down menu from Click to and select Trade. Press and hold the Ctrl key while clicking next to the intended strike. This will allow you to build an up to four-leg spread.
• Click and hold the position quantity to roll a position, then drag and drop to the intended Strike position column.

You can also roll positions within expiration terms.

• To close a position, open the Trade bar by clicking the Position quantity.
From the shortcut menu, right-click Position quantity and choose Poll Position or Close Position.