Introduction
I'm a software engineer & options trader. In this video you'll learn:
- What are options?
- Key terms
- Call & put basics
What Are Options?
Options are contracts giving you the right, not the obligation, to buy or sell an asset at a set price by expiration.
Key Point: One contract controls 100 shares.
Terminology
- Strike Price: Price you buy/sell at.
- Premium: Cost of contract.
- Expiration: Contract expiry date.
- ITM / OTM / ATM: In/Out/At‑the‑money.
Buying vs. Selling Calls & Puts
Calls
Buy Call
- Right to buy 100 shares
- Pay premium up front
- Profit if price > strike + premium
- Max loss = premium; profit unlimited
Sell Call
- Obligation to sell 100 shares
- Receive premium up front
- Profit = premium + capital gains
Puts
Buy Put
- Right to sell 100 shares
- Pay premium up front
- Profit if price < strike − premium
- Max loss = premium
Sell Put
- Obligation to buy 100 shares
- Receive premium up front
- Profit = premium; risk = strike − premium