Instructions

Open an online brokerage account with option trading authorization. Option trading requires additional disclosure and authorization to a regular stock brokerage account. The level of trading authorization is based on the trader’s previous experience. A level 2 — out of 5 — is required to buy calls or puts. Level 3 authorization is required for spread trading. The Barron’s 2010 Broker Survey rates thinkorswim, TradeMonster and MB Trading as the top brokers for option trading.

Buy call options on DJX if you predict the Dow will go up in value or put options if you are forecasting a drop in the value of the Dow Jones. The option chain for DJX in your brokerage screen will show all of the put and call options trading against the Dow. Strike prices are set in one point—100 Dow points—increments, and expiration dates are available for the next four months, then quarterly.

Tips & Warnings

References

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The Definition of Dow Futures

What Are Dow Jones Futures?

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