Your version of Internet Explorer is no longer supported and may not display all the features of our website. For the best experience, please update your browser with the latest version. Buying calls is a popular strategy for both novice and experienced options investors. Two reasons you might purchase calls are to profit from an increase in the price of the underlying security or to lock in an appealing purchase price.

Writing a call can be risky depending on whether your position is covered or uncovered. You take less risk by writing a call on stocks you already own, which is also known as writing a covered call. Like selling calls, buying puts can be an effective strategy that may help protect your assets or provide a profit in a bear market.

When you short a put option, you receive an upfront premium from the buyer. You also could be obligated to buy shares of the underlying stock if the stock falls below the option strike price. When you sell short or write a cash-secured put, you must have enough money in your account to cover the potential purchase of the underlying security. The exact amount needed is based on the strike price of the option.

If you sell a put option, you will receive the premium, and you could be required to buy the underlying security at the options strike price during the life of the option. Only an account with margin can engage in an uncovered put strategy.

Spread strategies are more complicated than buying or selling a put or a call because they involve entering two options transactions on the same underlying stock or index. A collar is a spread strategy where you simultaneously purchase a protective put and write a covered call on stock you already own.

If you hold a stock whose price has risen sharply, a collar can help you protect those gains against a future drop in price. 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 or account.

Trading Options | Scottrade

Such consent is effective at all times when using this site. Brokerage products and services offered by Scottrade, Inc.

All investing involves risk. The value of your investment may fluctuate over time, and you may gain or lose money. In this instance, equity is defined as Total Brokerage Account Value minus Recent Brokerage Deposits on Hold.

The performance data quoted represents past performance. Past performance does not guarantee future results. The research, tools and information provided will not include every security available to the public.

Options Basics | Scottrade

Although the sources of the research tools provided on this website are believed to be reliable, Scottrade makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability or reliability of the information.

Information on this website is for informational use only and should not be considered investment advice or recommendation to invest. Scottrade does not charge setup, inactivity or annual maintenance fees. Applicable transaction fees still apply. Scottrade does not provide tax advice. The material provided is for informational purposes only. Please consult your tax or legal advisor for questions concerning your personal tax or financial situation.

Investors should consider the investment objectives, charges, expense, and unique risk profile of an exchange-traded fund ETF before investing. A prospectus contains this and other information about the fund and may be obtained online or by contacting Scottrade.

The prospectus should be read carefully before investing. Leveraged and inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Investors should monitor these holdings, consistent with their strategies, as frequently as daily. Investors should consider the investment objectives, risks, charges and expenses of a mutual fund before investing.

No-transaction-fee NTF funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through recordkeeping, shareholder or SEC 12b-1 fees. 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.

It contains information on our lending policies, interest charges, and the risks associated with margin accounts. Options involve risk and are not suitable for all investors. Supporting documentation for any claims will be supplied upon request. Consult with your tax advisor for information on how taxes may affect the outcome of these strategies. Keep in mind, profit will be reduced or loss worsened, as applicable, by the deduction of commissions and fees.

Market volatility, volume and system availability may impact account access and trade execution. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss, in a down market. Third-party websites, research and tools are from sources deemed reliable. Scottrade does not guarantee accuracy or completeness of the information and makes no assurances with respect to results to be obtained from their use. Thank you for visiting Scottrade.

We have implemented a Skip to Main Content link and improved the heading structure of our site to aid in navigation with a screen reader. We are consistently making improvements to the accessibility of our site. If you are having difficulty accessing an area of the site, please contact us at accessibility scottrade. Search Keywords or Symbol. Open A New Account. Text Resize RSS Print. Noncore Investments Determining Your Asset Mix How Many Funds Do You "Need"? How Many Investments Should You Have?

How Much Risk Can You Tolerate? Regulatory Trading Suspensions Trading Halts: Options Strategies Long Calls Buying calls is a popular strategy for both novice and experienced options investors.

Scottrade Login - Access your Scottrade account

Short Calls Writing a call can be risky depending on whether your position is covered or uncovered. Long Puts Like selling calls, buying puts can be an effective strategy that may help protect your assets or provide a profit in a bear market. Short Put Strategies When you short a put option, you receive an upfront premium from the buyer. Shorting Cash-Secured Puts When you sell short or write a cash-secured put, you must have enough money in your account to cover the potential purchase of the underlying security.

Spreads Spread strategies are more complicated than buying or selling a put or a call because they involve entering two options transactions on the same underlying stock or index. Collars A collar is a spread strategy where you simultaneously purchase a protective put and write a covered call on stock you already own. Call Us At Unauthorized access is prohibited.