Three ways of trading options
As well as deciding which options trading strategies you’d like to employ, you’ll also need to choose how you’d like to buy and sell options.
1. Trading options with a broker
Listed options are traded on registered exchanges, just like shares. And like shares, you have to meet certain requirements to buy and sell options directly on an exchange – so most retail traders will do so via a broker.
When you trade with an options broker, you’ll deal on their platform, and they’ll execute your order on the actual exchange. You’ll usually pay commission on each trade.
2. Trading options with spread betting1
When you spread bet you get the right to bet a certain number of pounds per point on it. So a call option to buy £10 per point of the FTSE with a strike price 7100 would earn you £10 for every point that the FTSE moves above 7100 – minus the premium you paid to open the position.
You can spread bet on options alongside thousands of other markets, and there’s no tax to pay on your profits.2
Find out more about spread betting.