Lesson

Options flow in 90 seconds | Options Educator

Watch calls, puts, and payoff diagrams update as prices move.

In this lesson

What Are Options? The Big Picture

  • Call = right to BUY at strike price
  • Put = right to SELL at strike price
  • Premium = price you pay for this right
  • Options expire - time matters!

Understanding the Options Contract

  • Each contract = 100 shares
  • Strike price is your buy/sell target
  • Expiration is your deadline
  • Premium × 100 = actual cost

Intrinsic vs. Extrinsic Value

  • Intrinsic = real, immediate value
  • Extrinsic = time value + volatility expectation
  • ITM options have intrinsic value
  • OTM options are pure speculation on movement

Call Options Profit & Loss

  • Limited Risk: You can only lose the premium
  • Unlimited Reward: No cap on how high stock can go
  • Breakeven = Strike + Premium

Put Options Profit & Loss

  • Limited Risk: Max loss is the premium
  • Profit when stock CRASHES below strike
  • Breakeven = Strike - Premium

Time Decay: The Silent Killer

  • Theta = daily time decay
  • Decay accelerates near expiration
  • Buyers pay theta, sellers collect it
  • Last 30 days = danger zone for buyers

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