The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we are answering the question, “Do you have to own stocks to trade options?” This is a very common question and a lot of newbies ask this question. Very realistic question and rational question to ask and the short answer to this is no, you do not have to own stocks to be able to trade options. In fact, many of the trades that we do, practically, all of the trades that we've done here at Option Alpha have no stock involved whatsoever. Now, that doesn’t mean that you won't end up owning stock through assignment or exercise and expiration, but you do not have to own stocks as a prerequisite for trading options. Options by their nature are derivative instruments, meaning you can trade them and they derive their value from the underlying stock. But you can easily buy and sell option contracts without ever touching or having to deal with the actual stock shares. In fact, we think that stock is incredibly inefficient