§ 01
AAPL — Current Price. Open AAPL on the Ledge to see current values.
§ 02
| Moneyness | Call Example (Stock at $150) | Put Example (Stock at $150) | Has Intrinsic Value? |
|---|---|---|---|
| In-the-Money (ITM) | Strike $145 ($5 intrinsic) | Strike $155 ($5 intrinsic) | Yes |
| At-the-Money (ATM) | Strike $150 | Strike $150 | No (just time value) |
| Out-of-the-Money (OTM) | Strike $155 | Strike $145 | No |
§ 03
ATM options have the most time value and the highest theta decay. OTM options are cheaper but more likely to expire worthless. ITM options behave more like the stock itself.
§ 04
Call Intrinsic Value = max(Stock Price − Strike, 0)
§ 05
Look at an options chain for any stock. Identify which strikes are ITM, ATM, and OTM. Notice how premiums decrease as you move further OTM.
§ 06
A $100 call costs $12 when the stock is at $108. How much is intrinsic value vs. time value?
§ 07
§ 08
AAPL at $200. Call strike $210 = OUT of the money (OTM). Call strike $195 = IN the money (ITM). Time value at expiry?
Five questions · AI feedback
Sit with the ideas.
Stock XYZ trades at $80. Which of the following put options is in the money?
Why:
Try this in paper trading
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.