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Advanced Trading FAQs

What is options trading?

With options trading, you can buy contracts to speculate on price movements of stock, or sell contracts to generate income.

There are two basic types of options: calls and puts.

  • A call option contract gives you the right to buy (generally) 100 shares of the underlying stock (for every contract you purchase) at a set price up until the expiration date. Someone who buys a call option thinks the price of the underlying stock is going to go upward.
  • A put option contract gives you the right to sell (generally) 100 shares of the underlying stock (for every contract you purchase) at a set price up until the expiration date. Someone who buys a put option thinks the price of the underlying stock is going to head downward.

Please note: Options involve risk and are not suitable for all investors. Before investing in options, please read the Characteristics and Risks of Standardized Options.

What is the difference between Level 1 and Level 2 option trading?

Here’s a breakdown:

Level 1
A Level 1 options trader has the ability to place the following types of orders:

  • Write a Covered Call (sell to open)
  • Close a Covered Call (buy to close)
  • Perform a Buy / Write (buy a stock position and sell a call to open)
  • Perform an Unwind (sell a stock position and buy a call to close)

Level 2
Level 2 gives you more options (pun intended) to choose from:

  • All Level 1 strategies above, plus:
  • Buy a call (to open)
  • Buy a put (to open)
  • Sell a call (to close)
  • Sell a put (to close)

Please note: Options involve risk and are not suitable for all investors. Before investing in options, please read the Characteristics and Risks of Standardized Options.

As of November 5, 2018, your Capital One Investing account will be limited to only outbound transfers and closing orders.

What order types are available when placing options trades?

Depending on the type of options strategy you select(Covered Calls, Buy/Sell Options) you can choose between a market, limit, or stop-loss order. We'll look at these types of orders below:

Market Orders

A market order lets you buy a security at the best available price given the prevailing marketplace conditions. If you place a market order during non-market hours, we'll enter your trade when the market opens on the next business day.

Tip: You can create Market orders for every Covered Call and Buy/Sell strategy.

Limit Orders

  • If you'd like to buy or sell a security at a specific price, you'll want to enter a limit order.
  • A limit order triggers once it hits your predetermined price.
  • You can enter a limit order to expire at the end of the market day or keep it active for 60 calendar days (Good Until Canceled).
  • Limit orders are available for all Covered Call and Buy/Sell strategies.

Tip: Sometimes, limit orders take more than one market day to fill. In these cases, it may lead to two or more trades, and separate commission costs.

Stop-Loss Order

  • A stop-loss order lets you set a target price to sell your stock. Your order will trigger once it falls to that price or lower.
  • A stop-loss order is typically used to lock in profits, or limit risk while on vacation or away from the computer for a month or two.
  • When you enter a stop-loss order, you can set it to expire at the end of the market day or keep it active for 60 calendar days.
  • Stop-loss orders are only available when selling a call or a put to close a position on the Buy/Sell Options page.

Buy-Stop Order

  • A buy-stop order is a request to buy a stock - if (and only if) it reaches or goes above your target price.
  • Once your target price has been reached or surpassed, Capital One Investing℠ will then trigger a market order.
  • A buy-stop order is typically used to place a limit price when closing a short position.
  • When entering a buy-stop order, you can set it to expire at the end of the market day or keep it active for 60 calendar days.

Tip: Buy-stop orders are only available on the "Buy to Close" choice—within the Covered Call page.

Please note: Options involve risk and are not suitable for all investors. Before investing in options, please read the Characteristics and Risks of Standardized Options.

As of November 5, 2018, your Capital One Investing account will be limited to only outbound transfers and closing orders.

How do I buy or sell call and put options?

When your account is approved for level 2 options trading, you will be able to 'Buy/Sell Options.' Here's how it's done:

Sell to Close (Call or Put):

  1. Navigate to Trade > Trade Now > Options tab
  2. Select the correct account. Note: if you have one account the account will be preselected for you.
  3. Select the Sell to Close in the Action dropdown.
  4. Select the option you would like to sell from the Option dropdown.
  5. Enter the Number of Contracts you want to sell.
  6. Select the Order Type (Market, Limit or Stop). Note: If you select Limit, you must enter the Limit Price and select the Order Expiration.
  7. Click Review Order. Review the order carefully prior to submitting.
  8. Once the order has been submitted, you can check its status by navigating to Trade > Order Status.

Please note: Options involve risk and are not suitable for all investors. Before investing in options, please read the Characteristics and Risks of Standardized Options.

As of November 5, 2018, your Capital One Investing account will be limited to only outbound transfers and closing orders.