Key terms
- Call: right to buy at the strike price. Put: right to sell.
- Strike: the agreed price. Expiration: the last day the contract is valid.
- Premium: the option's price per share (x100 per contract).
- In / at / out of the money: strike below, near or above the stock price (for calls).
- Delta: sensitivity to the stock price, and a rough chance of finishing in the money.
How to place an options trade
- Apply for options approval with your broker.
- Open the option chain for a ticker.
- Pick expiration, then strike.
- Choose the action: Buy to Open, Sell to Open, Buy to Close or Sell to Close.
- Use a limit order near the mid price between bid and ask.
Risks to respect
- Bought options can expire worthless: you can lose 100% of the premium.
- Time decay (theta) works against buyers and for sellers.
- Selling uncovered options can mean large losses. Beginners should stay with defined-risk or covered strategies.
- Wide bid/ask spreads on thin options quietly cost money.
Educational use only. This site is not financial, tax or legal advice. Investing involves risk, including loss of principal, and option strategies carry additional risks. Figures are illustrative estimates, not quotes or guarantees.