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How to Trade Options: For Beginners

Welcome to Episode #31 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Kevin Matras, Zacks Vice President and portfolio manager of Zacks Options Trader service to talk about stock options: what they are and how you can trade them.

Tracey admits she has never traded an option so Kevin starts off with the basics.

What is an option?

Options provide 3 advantages over regular stock trading:

1. Limited Risk

2. Leverage

3. Flexibility

But there’s a bunch of things that beginners should learn before jumping in.

What’s a call and a put? What’s the easiest of the two to use for beginning traders?

Tracey always hears about being “in the money.” What does that mean?

Kevin takes Tracey through three option examples that beginners would be able to execute, including Johnson & Johnson (JNJ), Simon Property Group (SPG) and Facebook (FB).

With Facebook, he takes it one step further and discusses a bull call spread that can limit the profit potential but is a common strategy when options are expensive.

While the options “lingo” may sound complex, “bull call what ???”, Kevin lays it out so even Tracey can understand it.

If you’ve ever wondered how options work or thought about trying to trade them, then this is a must-listen podcast.

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