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Trading options with BMO InvestorLine Self-Directed

Elevate your investment strategy with our comprehensive options trading tools and resources.

  • Begin your journey with a simple, easy-to-use platform
  • Boost your knowledge with in-depth learning resources
  • Integrated tools to help you navigate the market with ease
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What are options?

Options are financial contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset, usually a stock or ETF, at a specific price by a specific date. 

Great for

Experienced investors seeking strategic flexibility and opportunities in market volatility.

Typical Risk Level

Medium-high

Typical investing horizon

Short to medium-term

Understanding Options Trading

Options provide flexibility and control, allowing you to speculate on market movements or hedge against uncertainties in your portfolio.

Definitions
  • Options contract: The agreement between the option buyer and seller. One contract usually represents 100 shares of the underlying asset.

 

  • Strike price: The price at which the underlying asset can be bought or sold, as specified in the options contract.

 

  • Expiration date: When an options contract expires and is no longer valid for trading.

 

  • Premium: The cost (for buyers) and revenue (for sellers) of the options contract.
  • Buying a CALL option: Gives you the right to buy the underlying asset at the strike price on or before the expiration date.

 

  • Buying a PUT option: Gives you the right to sell the underlying asset at the strike price on or before the expiration date.

 

  • Selling a CALL option: You are obligated to sell the underlying asset at the strike price if the option buyer chooses to exercise on or before the expiration date.

 

  • Selling a PUT option: You are obligated to buy the underlying asset at the strike price if the option buyer chooses to exercise on or before the expiration date.

Benefits of options trading

Whether you’re looking to manage risks or explore new avenues for potential income, options trading can be a versatile addition to your investment strategy. At BMO, we provide you with the tools and insights to integrate options into your portfolio effectively, catering to both risk management and income generation needs.

Diversification

Gain exposure to the wider market and diversify your portfolio in a cost-efficient way.

Risk Mitigation

Manage risk by using options to hedge against market volatility.

Income Generation

Boost your profit potential by speculating on market movement.

Get started with BMO InvestorLine Self-Directed

Confidently trade options, stocks, ETFs and more with comprehensive research and tools designed to simplify your investment journey.

  • Leverage advanced trading features and dedicated support
  • Access industry leading research and real-time quotes
  • Make informed decisions with personalized performance tracking and insights

Experienced trader? Elevate your trading with BMO InvestorLine’s 5-Star Program

Tailored for seasoned traders, our program offers exclusive tools, options trading, and dedicated support for those with 15+ trades per quarter or over $250,000 in investments.

  • Get dedicated support with exclusive pricing.
  • Superior tools and analysis for better-informed decision-making.
  • Free access to BMO Active Trader – our most powerful online trading platform yet.

Related Resources

Options Trading: Get Started with our Beginner's Guide

Discover option trading and different option trading strategies that will help maximize your ROI.

What is the VIX, or Volatility Index and How Does It Work?

Everything you need to know about the Volatility Index.

FAQs

  • Options trading differs from traditional stock trading as it involves buying contracts that grant you the right to buy or sell stocks at a predetermined price by a specific date. Unlike owning shares directly through stock trading, options trading offers strategic flexibility as it requires less initial capital. However, it does carry unique complexities and risks.

    The potential for losses in options trading can surpass the initial investment, especially with certain strategies. It’s important for traders to thoroughly understand both the mechanics and risks involved with options, including the possibility of losing the entire premium paid for the options contract.

  • Popular strategies include:

    • Buying calls or puts for speculation or hedging
    • Selling covered calls for potential income generation
    • Bull and bear spreads for speculation

    Each strategy has unique goals and risk profiles that are suitable for different market conditions and investor objectives.

  • Yes, options can be traded on various assets including stocks, ETFs and indexes. This allows investors to trade options strategies across a diverse range of investment opportunities.

  • Some common mistakes in options trading include:

    • Not understanding the specific terms of an options contract
    • Ignoring the impact of time decay on premium prices
    • Failing to manage risk adequately

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