Options Basics

An option gives you the right, not the obligation, to buy or sell 100 shares at a set price by a set date. Here's what a call and a put actually do, with real numbers.

The strike price sets the deal. The premium sets what it costs. Here's how the two relate, with a worked example of what actually makes up an option's price.

Every option has an expiration date, and after that it's simply gone. Here's what happens at expiration and why the calendar matters as much as the stock price.

ITM, OTM, and ATM just describe where the stock price sits versus the strike. Here's exactly what each means for calls and puts, with a side-by-side example.

Volume counts today's trades. Open interest counts contracts still open. Confusing the two gives you the wrong read on how liquid an option really is.

The price you buy at and the price you sell at are rarely the same number. Here's what the bid-ask spread costs you, even when the stock doesn't move.

Implied volatility is the market's guess at how much a stock might move. Here's what it means and why the same stock can carry very different IV over time.

Sell an option, and someone else decides if and when you're forced to buy or sell the stock underneath it. Here's exactly when assignment happens.

Exercising is the buyer's move — actually using the right an option provides. Here's the step-by-step version of what happens to your cash and shares.

Assignment doesn't only happen on expiration day. Here's why early assignment occurs and the two situations that make it noticeably more likely.

The Greeks are just numbers describing how an option's price reacts to change. Here's a first, plain-English look at delta, theta, gamma, and vega.

Delta and theta are the two Greeks beginners meet first. Here's a closer look at both, with a worked example of them pulling against each other.

This course only skims the Greeks on purpose. Here's why gamma, vega, and real strategy decisions get their own dedicated course.