{"id":517071,"date":"2022-11-08T10:58:07","date_gmt":"2022-11-08T08:58:07","guid":{"rendered":"https:\/\/www.etoro.com\/?page_id=517071"},"modified":"2025-11-03T15:26:26","modified_gmt":"2025-11-03T13:26:26","slug":"how-to-trade-options","status":"publish","type":"page","link":"https:\/\/www.etoro.com\/en-us\/options\/how-to-trade-options\/","title":{"rendered":"Options Trading Explained"},"content":{"rendered":"\n

Trading options is, in many ways, very similar to trading any other financial instrument, such as stocks. However, there are some important aspects of options trading that investors need to know. This step-by-step guide will outline what they are and how to place your first trade.<\/p>\n\n\n\n\n\n\n

\n\n\n\n

Options trading offers a way of developing more sophisticated investment strategies. This guide will walk you through the process of trading options and outline the steps involved, from logging in to making your first trade.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Log in to your Account<\/h2>\n\n\n\n

To begin trading options on eToro, you must first set up an options trading account on the main eToro app. <\/strong>Depending on your experience you may need to answer a few questions before being approved and your options trading account must be registered and verified before making your first trade. <\/p>\n\n\n\n

<\/span>
\n

Tip: <\/strong>Account verification is required to ensure compliance with regulatory standards and to provide a secure trading environment.<\/p>\n<\/div><\/div>\n\n\n\n

Fund your Options Trading Account<\/h2>\n\n\n\n

Once you\u2019ve logged in to your new account you can start depositing funds<\/strong>. eToro offers several convenient payment options including transferring money from your existing eToro investment account or eToro crypto account.<\/p>\n\n\n\n

Simply navigate to the Wallet tab, select \u2018Internal Transfer\u2019, enter the amount<\/strong>, and then click \u2018Confirm\u2019. Or alternatively fund your options account using a bank transfer.<\/mark><\/p>\n\n\n\n

Each method has its own processing time and fees, so it’s advisable to review these details beforehand to select the most suitable option for your needs. Any time delays can be seen as an opportunity to familiarize yourself with the options trading interface<\/strong> and to check for any notifications or updates that might affect your trading decisions.<\/p>\n\n\n\n

Funding your account adequately is essential<\/strong> as it determines your purchasing power and the range of options you can trade. Always ensure that your account balance aligns with your trading strategy and risk management<\/e-tip> plan.<\/p>\n\n\n\n

<\/span>
\n

Tip: <\/strong>The funds in your eToro investment and crypto accounts are counted as different from the funds in your options account. <\/p>\n<\/div><\/div>\n\n\n\n

Choose your Option<\/h2>\n\n\n\n

Selecting the right option is a critical step in your trading journey. When choosing an option, look for favorable market conditions that align with your investment goals.<\/mark><\/p>\n\n\n\n

Use the Discover page<\/strong> to search for your favorite stocks<\/a> or ETFs<\/a>, and find one that you like. Then, hit \u201cTrade\u201d followed by \u201cTrade Options\u201d.<\/strong><\/p>\n\n\n\n

<\/span>
\n

Tip: <\/strong>The eToro Academy<\/a> is a great source for information on technical terms such as expiry date and strike price.<\/p>\n<\/div><\/div>\n\n\n\n

Purchase your Option<\/h2>\n\n\n\n

After selecting your desired option, the next step is to purchase it<\/strong>. Before finalizing the purchase, review all relevant metrics such as the option’s premium, implied volatility<\/e-tip>, and potential payoffs. This review will ensure that you have a clear understanding of the trade’s potential outcomes.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Finally, select the number of 100-share contracts you\u2019d like to purchase, then tap \u201cSubmit\u201d.<\/strong><\/p>\n\n\n\n

Once you\u2019ve purchased your option, you have some choices to make. One choice is to wait until the<\/strong> expiry date<\/e-tip><\/strong> to see what happens<\/strong>. If the stock moves enough in the expected direction, you could make a profit. eToro will close your option at 3:30pm EST on its expiry date*, and you\u2019ll see your pending profit in your account at that time.<\/p>\n\n\n\n

Trade your Option<\/h2>\n\n\n\n

If you decide you don\u2019t want to wait for your option to expire and cash out, you can sell it to someone else in the market. You\u2019ll have to go to your existing ticket, and decide what order type you\u2019d like to pursue: market, limit, or trigger.<\/strong><\/p>\n\n\n\n

If you choose a limit order, simply set your ask price (we\u2019ll display choices for you, based on what the current bid prices are for similar options), a time limit, and wait to see if someone takes you up on your offer.<\/p>\n\n\n\n

<\/span>
\n

Tip: <\/strong>Choosing the right order type can enhance your trading efficiency and help you achieve your investment objectives.<\/p>\n<\/div><\/div>\n\n\n\n

Other Ways to Trade<\/h2>\n\n\n\n

If you’re not ready to commit immediately, you can book virtual trades using the eToro <\/strong>draft trading<\/strong><\/a> feature<\/strong>. This flexibility allows you to familiarize yourself with the lifespan of options, refine your strategy, and to some extent simulate what trading options is like.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n
<\/span>
\n

Tip: <\/strong>Options trading might not be available for you depending on your country. You can check whether or not the eToro options service is available in your country by visiting this page<\/a>.<\/p>\n<\/div><\/div>\n\n\n\n

Final thoughts<\/h2>\n\n\n\n

Options trading is a versatile tool for managing portfolio risk and exploring market opportunities. This guide empowers you to begin trading on eToro with practical steps and insights to foster informed trading decisions.<\/strong> <\/p>\n\n\n\n

Remember, successful trading requires continuous learning and adaptation to changing market conditions.<\/strong><\/p>\n\n\n\n

Learn more about option trading strategies by joining the eToro Academy<\/a>.<\/p>\n\n\n\n

*In rare instances, we\u2019re unable to sell expiring positions at 3:30 pm EST. In these instances, clients are responsible for losses due to assignment or expiry.<\/p>\n\n\n\n

Quiz<\/h2>\n\n\n\n
\n
If you own an option and want to sell it, which price is the one which you would trade at?<\/div>\n
Bid price<\/div>\n\n\n\n
Ask price<\/div>\n\n\n\n
Strike price<\/div>\n<\/div>
\u00a0<\/div><\/div>\n<\/div>\n\n\n\n\n\n

FAQs<\/h2>\n\n\n\n
\n
What steps do I need to follow to start trading options on eToro?<\/dt>
\n

To start trading options on eToro, you need to register for an account, log in to it, fund it, choose your option, purchase it, and decide on your trade order type. Each step is crucial for a successful trading experience. For more details, refer to eToro’s comprehensive guides<\/a>.<\/p>\n<\/dd><\/div>\n\n\n\n

How should I choose between market, limit, or trigger order types?<\/dt>
\n

Choosing between market, limit, or trigger order types depends on your trading strategy and objectives. Market orders are for immediate execution, limit orders allow price control, and trigger orders automate trades based on conditions. Consider your priorities and investment goals<\/a> when selecting an order type.<\/p>\n<\/dd><\/div>\n\n\n\n

What are the advantages of virtual trading on eToro?<\/dt>
\n

Virtual trading on eToro allows you to simulate trades without using real funds. This feature is beneficial for testing strategies and gaining confidence before executing actual trades. It provides a risk-free environment to refine your approach and improve your trading skills.<\/p>\n\n\n\n

It is important to keep in mind that your trading psychology<\/a> will need to adapt when you switch from trading virtual to real funds.<\/p>\n<\/dd><\/div>\n<\/dl>\n\n\n\n\t\t