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Can someone briefly discuss how to buy call options. What are the best (cheap) brokerages that allow you to buy options. What are the advantages to buying options vs. common stock. How can you see what options are available for a particular company (using yahoo!finance for example). If the price of an option is $0.35, is that the cost per share that you will buy, or is that the total cost of the option of buying 100 shares? I am a novice investor (with just ~$2k in my cheap online brokerage account), young, and beginning to get more curious about various derivatives. Also I obviously don't really care at this point about losing or making money in the market- at this point I'm just trying to familiarize myself so that in the future I can.....make.....millions.....(ha).
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My option broker is Scottrade they charge $7 + $1.25/per contract. There are cheaper brokers out there, but I feel that Scottrade gives me the best fills for the cheapest price. The advantage of buying options over common stock is that they provide more leverage, and limit your downside exposure to only the amount of the premium paid for the option. I don’t think Yahoo! provides option chain information, but you can use
this site to look up option chain information, and they also provide you with all the greeks. The price listed is on a per share basis so as most contracts are for 100 shares just multiply 0.35 * 100 and you get $35.00 which is what you would pay for that option. Being a novice investor is alright everyone has to start someplace, but I would really suggest you stick to equities for at least a few years before getting into option derivatives. Most brokerages would probably only certify you for covered call writing to begin with anyway if you haven’t had much experience investing so I would start with that and then work your way up to actually trading calls/puts.