📉 Options & Cboe · Lesson 1 of 7 · 11 min
What Are Options?
📉 An option is a contract that lets you control 100 shares for a fraction of what the shares cost. On a good week it turns $300 into $1,200. On a bad one it turns $300 into a receipt. Same contract, same math — the only variable is whether you understood it before you bought it.
💡 Key idea
Calls = right to BUY. Puts = right to SELL. 100 shares per contract.
🧠 Why it matters
Options = right (not obligation) to buy/sell stock at specific price by specific date. CALLS = bullish. PUTS = bearish.
🌍 In the real world
🚀 Buy Tesla $200 call for $5. Tesla rises to $250. Option worth $50 — 10x return.
📌 Takeaways
- Right, not obligation
- Calls bullish, Puts bearish
- 100 shares per contract
📖 Terms in this lesson
Option: A contract giving the right, not the duty, to buy or sell something at a set price by a set date.
Strike price: The fixed price an option lets you buy or sell at.
✅ Test yourself
A call option gives you the right to...
- Sell at the strike price
- Buy at the strike price
- Force someone to buy
- Own the company
Answer: B · Buy at the strike price
A CALL gives you the right (not obligation) to BUY a stock at a set 'strike' price before expiration.
A put option gives you the right to...
- Buy a stock
- Sell a stock at the strike price
- Hire a CEO
- Get a dividend
Answer: B · Sell a stock at the strike price
A PUT gives you the right to SELL at the strike price — useful as insurance or to profit from a drop.
Why are options considered risky for beginners?
- They never make money
- They expire and can go to zero fast
- They are illegal
- They are too cheap
Answer: B · They expire and can go to zero fast
Options have expiration dates. If the trade does not work out in time, they can lose all their value quickly.
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