Options Trading FAQs

1. What is an option？

A：An option is a contract signed between a buyer and a seller. The option buyer (the owner or holder of the option) has the right to buy or sell the underlying asset at a specific price on or before a specified date. Compared to the buy/sell strategy of stocks, options can provide investors with more trading strategies.

2.What are the advantages and risks of options?

• Options are cost-effective and highly leveraged. Investors can trade options to obtain similar stock positions without actually trading the stock, while the volatility risk is magnified accordingly.
• Options is a common way of hedging risk. However, options carry additional risk factors than stocks, such as time values and extended volatility.
• Options have the potential to amplify returns and losses for investors.
• Options provide a strategic option for investing in stocks. There are many strategies that can be used to restructure a portfolio through options; However, the risks of options trading are more complex than stock investments.

3.What kind of US stock options trading does Webull currently support?

A: Currently, only long side trading of U.S. stock options is available.

4.What order types can I trade U.S. stock options?

A: Clients can trade U.S. stock options using limit orders.

5.The trading unit of the option is？

A：An option is a contract in units of "number of tickets". Webull customers can trade U.S. stock options from a minimum of 1 ticket.

6.How to check the option contract size？

A：There will be a "Contract Multiplier" information on each option page. The contract multiplier for a general U.S. stock option is 100, which represents 100 underlying shares to be exercised in an option contract. For example, if an investor holds an in-the-money call option, he will have to purchase 100 shares of the underlying stock when exercising his option.

7.How do I open U.S. stock options trading?

A：In general, clients are required to submit an application for options trading. Customers can submit an application through Account Management, read the basic introduction of options and sign the option risk disclosure statement. After submitting the application, the option trading application will be approved immediately.

8.If the underlying stock of the option is split or combined, what will happen to the corresponding option?

A：The corresponding options of different underlyings may be adjusted differently, and there will be a corresponding notice in the Webull APP. Customers can also visit the website of OCC , the U.S. option clearing company ( https://infomemo.theocc.com/infomemo/search ) to search for the stock code of the upcoming company action and inquire about the handling of the right to the occurrence of the relevant situation.

9.Do I need a margin to trade U.S. stock options with Webull?

A：No. At present, Webull only supports long positions for options. The maximum risk of long option is that the client loses the premium paid for the option.