Knowing how to set up an options trading account and making your first options trade can be a daunting task. You may be asking yourself, where do I start? What broker should I use? How much money do I need to get started? In this video, we will walk you through the process of setting up an options trading account with Tastyworks and making your first trade. Options are a versatile financial instrument that can be used to create income and protect your portfolio during times of market volatility. This video will provide you with the information you need to get started in options trading!
We discuss:
How to open an account with Tastyworks
How to place your first options trade
Real quick guys, please hit the like and subscribe buttons below as well as comment and let me know your thoughts on this video.
Also, be sure and grab the FREE Simplified Options Strategies Trading Guide. I’ll put a link down below. It covers the different options strategies setups, how and when to put them on, max profits, and trade management. It’s a great guide to have by your side when trading options.
So let’s get started!
How to Open an Options Trading Account
If you’re interested in trading options, you’ll need to open an account with a broker that offers options trading. Tastyworks is our recommended broker for options trading. It was also named the best options trading platform in 2022 by Investopedia. It’s the one that I use because it’s user-friendly and intuitive. I’ll put a link below that will give you access to their special offer. Currently, you can receive up to $2000 cash back when opening a new account.
To open an account with Tastyworks, head to their website at tastyworks.com and click “Open an Account.” From there, you’ll need to enter your personal information, including your name, address, email, and Social Security number.
Once you’ve completed the application, you’ll need to fund your account. As of today when I’m making this video, I don’t believe there is a minimum. However, I recommend starting with at least $2000. This allows you to place a few trades to get started.
The easiest way to fund your tastyworks account is by setting up an ACH. An ACH establishes an electronic relationship between your bank account and your tastyworks account. Once you link your bank account with tastyworks, you’ll be able to move funds easily to and from your brokerage account. And the best thing! ACH deposits and withdrawals are FREE.
Now that your account is open and funded, you’re ready to place your first trade!
How to Place Your First Options Trade
Placing your first options trade can be a daunting task. It doesn’t have to be. We first want to look at the market and see if we want to be bullish thinking the market will go up, bearish thinking the market will go down, or neutral.
Being that we are options traders and believe everything is priced in and the market is extremely efficient, we may want to have all three strategies on so that we stay pretty delta neutral overall and make money on both sides whether the market moves up or down.
So in this video, we will start with a bullish trade. Be sure to subscribe to the channel because we will add two more trades in the next video. A neutral and a bearish trade.
First off, we want to put on a bullish trade on a day when the stock market is down. This provides us with a little better entry point. Let’s look for a stock that is priced below $30 and we are bullish on. In other words, we like the stock and believe it will go up in price.
Let’s look at Draft Kings ticker DKNG. We will sell a naked Put option.
Draft Kings has high IVR of 80 which is great because we collect more premium when IVR is high. In this example, we go the Trade tab and Table mode on the tastyworks platform. We pick the Nov 18th expiration date since it is 39 Days To Expiration. It should be between 25 and 45 DTE.
So we choose the 12.5 Put option. This gives is a 72% POP or Probability of Profit. We are collecting $92 upfront when we place the trade and only use $158. This is good ROI!
Now if we go to the curve mode, you will see the power of this strategy. As long as the stock says above $12.5, we keep the max profit of $92. Keep in mind the current price is $14.85. So it can move down against you and you still can make the max profit. In fact, you are still profitable down to the breakeven at $11.58. That would take a 22% decline in the stock price within the next 39 days for you to start losing money.
So we hit Review and Send and it will take us to the page we review to make sure everything is as we would like it. The trade is placed when we hit Send Order.
Thanks for watching! I hope this helped you better understand how to open an options trading account and place your first trade. Please remember to comment below, hit the thumbs up and subscribe so you will be notified of more videos like this. In the next video, we will be covering placing your next two options trades.
Also, be sure and grab the FREE Simplified Options Strategies Trading Guide. I’ll put a link down below. It covers the different options strategies setups, how and when to put them on, max profits, and trade management. It’s a great guide to have by your side when trading options.