Options can seem intimidating at first, but understanding the basics opens up a world of strategic possibilities for your trading.

What Are Options?

An option is a contract that gives you the right (but not the obligation) to buy or sell an asset at a specific price before a certain date.

Call Options Give you the right to BUY at the strike price. You profit when the underlying goes up.

Put Options Give you the right to SELL at the strike price. You profit when the underlying goes down.

Key Terms

• Strike Price: The price at which you can buy/sell
• Premium: The cost of the option contract
• Expiration: When the option contract expires
• In the Money (ITM): Option has intrinsic value
• Out of the Money (OTM): Option has no intrinsic value

Basic Strategies for Beginners

Buying Calls Bullish bet with limited risk (the premium you paid)

Buying Puts Bearish bet or portfolio protection

Covered Calls Own the stock, sell calls against it for income

Risk Management

Options can expire worthless—never risk more than you can afford to lose. Start small and paper trade before using real money.