Buying and selling options
Points to know
- Options trading gives you the right to take a specific investment action in the future if it benefits you—or let it expire if it doesn't.
- Options are investments whose value, like other investments, depends on what's happening in the market.
- You must have our prior approval before you can trade options.
Call & put options
The right to either buy (call option) a specific security at an agreed-upon price or sell (put option) a specific security at an agreed-upon price sometime in the future.
Learn all you can about options
There are 2 basic kinds of options: calls and puts. With options trading, you gain the right to either buy or sell a specific security at a locked-in price sometime in the future.
How to trade options
You have 4 ways to make options transactions:
- Buy to open. An order to purchase an option.
- Sell to close. An order to sell an option you hold.
- Sell to open. An order to write (sell) an option.
- Buy to close. An order to close an option you wrote.
This holds the money you use to buy securities, as well as the proceeds whenever you sell.
How options settle
Buying an option
You must have enough money in your settlement fund to cover your purchase when you place an order. You can't place an order and fund it later.
Selling an option
The trade will settle on the following business day.
Exercising an option
You must place your request through an investment professional by calling 800-992-8327.
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Open or transfer accounts
Open or transfer accounts
Options are a leveraged investment and are not suitable for every investor. Options involve risk, including the possibility that you could lose more money than you invest. Before buying or selling options, you must receive a copy of Characteristics and Risks of Standardized Options issued by OCC. A copy of this booklet is available at theocc.com. It may also be obtained from your broker, any exchange on which options are traded, or by contacting OCC at 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 (888-678-4667 or 888-OPTIONS). The booklet contains information on options issued by OCC. It is intended for educational purposes. No statement in the booklet should be construed as a recommendation to buy or sell a security or to provide investment advice. For further assistance, please call The Options Industry Council (OIC) helpline at 888-OPTIONS or visit optionseducation.org for more information. The OIC can provide you with balanced options education and tools to assist you with your options questions and trading.
All investing is subject to risk, including the possible loss of the money you invest.
Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.
The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.
VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.