How to Trade Long Calls and Puts on thinkorswim® Web

TL;DR

Learn how to trade long calls and long put options on thinkorswim® web, a browser-based version of the platform, with tips and strategies to increase profitability.

Transcript

Hey everyone. I'm Education Coach Michael Kealy, and today, I'm going to show you how to trade long calls and long put options on thinkorswim® web. thinkorswim web is the browser-based version of thinkorswim. There's no download required; just go to trade.thinkorswim.com and log in. thinkorswim web takes essential tools from thinkorswim desktop and... Read More

Key Insights

• 🕸️ thinkorswim web is a browser-based version of the thinkorswim platform, offering essential tools for options trading.
• 🪘 Long calls and long puts are speculative trades that involve buying options to profit from expected price movements.
• 🪘 Choosing the right underlying stock and contract expiration is crucial for successful long call and long put trades.
• 🗯️ Balancing costs, probability, and liquidity are important factors when selecting the right options for these trades.
• 🪘 Proper position sizing and risk management are crucial for long call and long put trades.
• 🎯 Closing trades at target profits is essential to maximize profitability.

Questions & Answers

Q: What is the difference between long calls and long puts?

Long calls are bullish trades where you buy call options to profit from an expected price increase, while long puts are bearish trades where you buy put options to profit from an expected price decrease.

Q: How do you choose the right contract for a long call trade?

Look for highly liquid options with plenty of time to expiration and without inflated implied volatility. Choose at-the-money options a few months from expiration on uptrending stocks.

Q: How do you choose the right contract for a long put trade?

Look for plenty of time to expiration and choose at-the-money options on downtrending securities likely to make a quick drop in price.

Q: How do you determine the number of contracts to buy for a long call or long put trade?

Calculate your portfolio risk, considering the maximum loss, premium, and fees per contract, divided by your desired risk per trade. This will help you determine the number of contracts to buy.

Summary & Key Takeaways

• The thinkorswim web platform provides access to essential tools for options trading, making it easier to learn and trade.

• Long calls are speculative bullish trades, while long puts are speculative bearish trades.

• To trade long calls, choose at-the-money options on uptrending stocks a few months from expiration for increased likelihood of profitability.

• To trade long puts, look for downtrending securities likely to make a quick drop and choose at-the-money options with plenty of time to expiration.