Buying options on top stocks like Apple, Tesla, or Amazon can be a smart way to potentially boost your profits — if you understand how they work. But let’s be honest: options trading can seem complicated and overwhelming for beginners. The good news? It doesn’t have to be.
Here’s a simple guide to help you buy options without getting lost in confusing financial jargon.
1. Understand What an Option Is
An option is a contract that gives you the right (but not the obligation) to buy or sell a stock at a set price before a certain date.
- Call Option = You bet the stock will go up
- Put Option = You bet the stock will go down
Think of it like putting down a small deposit to lock in the price of a stock — without committing to buy it right away.
2. Choose a Reliable Brokerage Platform
To buy options, you need an account with a brokerage that offers options trading. Some popular and beginner-friendly platforms include:
- Robinhood
- TD Ameritrade (thinkorswim)
- E*TRADE
- Webull
Most platforms will ask you a few questions to assess your risk level before allowing you to trade options.
3. Pick a Top Stock You Want to Trade
Look for well-known, high-volume stocks like:
- Apple (AAPL)
- Tesla (TSLA)
- Microsoft (MSFT)
- Nvidia (NVDA)
These are called liquid stocks — meaning they’re actively traded and have lots of option contracts available.
4. Analyze the Stock’s Direction
Before buying an option, ask yourself:
- Do you think the stock will go up or down?
- How soon do you think the move will happen?
This helps you decide whether to buy a call or a put, and how far into the future your contract should expire.
5. Choose the Right Option Contract
Here are the key terms to know:
- Strike Price: The price at which you can buy (call) or sell (put) the stock.
- Expiration Date: The last day your option is valid.
- Premium: The price you pay to buy the option.
Example:
You buy a call option on Apple with a $180 strike price, expiring in 30 days. You pay a $5 premium. If Apple goes to $190, your option is now “in the money” — and potentially profitable.
6. Make Your Purchase
Once you’ve picked your contract:
- Go to your brokerage platform
- Search for the stock
- Click on “Options”
- Choose your strike price and expiration
- Select the number of contracts
- Click “Buy”
Each contract controls 100 shares of the stock. So if the premium is $2, it will cost you $200 (2 x 100).
7. Manage Your Position
Watch the stock’s price. You can:
- Sell the option before it expires to lock in profits or limit losses
- Exercise the option (buy or sell the stock at the strike price)
- Let it expire if it’s not profitable (but you’ll lose the premium)
Final Tips to Keep It Simple
- Start small — don’t risk too much in the beginning
- Stick to top stocks with lots of trading volume
- Use demo accounts or paper trading to practice
- Always know how much you’re risking upfront (the premium)
Conclusion
Buying options on top stocks doesn’t have to be confusing. With a basic understanding and the right tools, you can start trading smarter and with more confidence. Keep learning, stay patient, and trade responsibly.