Option 101

Types of Options

  • Call Option:
  • Put Option:
  • American vs. European:

Option Terminology

  • Strike Price, Premium, Expiry
  • Moneyness: ITM, ATM, OTM
  • Intrinsic vs. Time Value

Option Pricing Basics

  • Factors affecting premiums.
  • Introduction to Greeks: Delta, Gamma, Theta, Vega

Basic Strategies

  • Buying Calls and Puts
  • Covered Calls and Protective Puts
  • Breakeven analysis

    • Options Trading Mechanics

  • How contracts are created and settled.
  • Role of option chains
  • Margin and assignment

    • Risks and Reward Profiles

  • Max Profit and Loss scenarios.
  • Risk/reward visualization
  • Importance of risk management