Live price of an example stock
How calls and puts differ
| Call Option | Put Option | |
|---|---|---|
| Right to... | BUY 100 shares at strike price | SELL 100 shares at strike price |
| You profit when... | Stock rises above strike + premium | Stock falls below strike − premium |
| Max loss (buyer) | Premium paid | Premium paid |
| Max gain (buyer) | Unlimited (stock can rise indefinitely) | Strike price − premium (stock can fall to $0) |
| You’re bullish? | Buy a call | — |
| You’re bearish? | — | Buy a put |
This course covers buying options only
You will also see the mirror trades quoted — sell a put when bullish, sell a call when bearish. Selling an option is NOT the beginner version of the same bet: your maximum gain is capped at the premium you collect, while your potential loss can be many times that — an uncovered short call has no upper bound at all. This course teaches BUYING options only. The final section and Options 201 explain when selling can make sense; do not sell options before completing them.
Each contract controls 100 shares
Every option contract controls 100 shares. A call priced at $3.00 costs $300 ($3 × 100 shares). This leverage is what makes options powerful — and dangerous.
Calculating an option's total cost
Option Cost = Premium × 100 shares
Match a stock view to a call or put
What is the profit on a long call?
Defined risk as options' core property
Why selling options is different
Selling options without a hedge has very different risk than buying. Naked short calls have theoretically unlimited loss (the stock can rise to any price); naked short puts have bounded but very large loss (strike x 100 minus premium received — on a $100-strike put, you can lose up to $9,700 per contract if the stock goes to zero). Do not sell options without completing a more advanced course on spreads and defined-risk structures. FINRA's options-approval framework treats short uncovered options as level 4-5 — many brokerages will not permit them at retail level 1 precisely because of this asymmetric risk profile.
What a call is worth at expiration
Sit with the ideas.
You buy a call option with a $150 strike on a stock currently trading at $140. The option costs $3.00. What is your maximum possible loss?
Buy 100 shares of a covered-call candidate
Pick a stock you'd be comfortable selling at 10% above today's price. Paper-buy 100 shares (a standard options contract size). Journal what strike + expiration you'd write a covered call at, even though we're not paper-trading options at v1.
Open paper portfolio →Practice mode — simulated trades, not investment advice.