Options Trading Basics — Course Summary

Options are contracts, not stocks. A call gives you the right to buy at a set price; a put gives you the right to sell. You pay a premium for this right, and the contract expires on a specific date. Unlike stocks, options have a time limit - and time decay (theta) works against buyers.

Price depends on more than direction. Option premiums have two parts: intrinsic value (how much the option is “in the money”) and extrinsic value (time and volatility premium). The Greeks - Delta, Theta, Vega, and Gamma - help predict how options move. Understanding them is essential before risking real money.

Start with defined-risk strategies. Covered calls let you earn income on stocks you already own. Protective puts act like insurance for your portfolio. Both strategies have limited, known risk. Avoid selling naked options or complex strategies until you have years of experience.

Position sizing is everything. Never risk more than 1-5% of your account on a single trade. Most options expire worthless - that's normal. Paper trade first, start small, and treat losses as tuition. The traders who survive long-term are the ones who respect risk above all else.