Before participating in
a market, regardless of which one, it is important that one become familiar
with may of the trading nuances and aspects which apply to that specific
market. This is especially true when trading options. Once these variables
are addressed and an option contract is selected, the trader must then
place the order. When placing an option order, a trader must make certain
to supply the following trading instructions to the broker:
Whether the option order is a buy or a sell
The number of option contracts the trader wishes to transact
The proper description of the option, including the specific option
contract to be traded, the correct month and year, and the exercise price
The price at which the trader wishes to buy or to sell the option
The specific exchange the trader wishes to use to conduct the trade
if more than one exchange lists the option
The stop loss level, or the price at which the trader wishes to exit
an unprofitable trade
The type of option to be executed, that is, an opening purchase, a
closing purchase, an opening sale, or a closing sale
