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Options trading, simplified
Here’s how to understand the basics of options trading and the risks involved. We’ll also walk you through the more advanced trading moves — and how to know if you’re ready for them.
The foundations of options
To understand the basics of options trading, you need to be familiar with these three things: calls, puts, and the mind-numbing charts that show you all the options being offered.
What is a call option?
Think a stock price is going to go up? A call option lets you take that position.
What is a put option?
Think a stock price is going to go down? A put option lets you take that position.
What is an options chain?
These complicated tables show you what options are available to buy and how much they’ll cost you.
The mechanics of momentum
Option chains
These complicated tables show you what options are available to buy and how much they’ll cost you.
The Greeks
Some important Greek words to know. The options Greeks are mathematical indicators that influence option prices.
Volatility and skew
Go beyond price direction. Reading risk and expectation can help you identify the right option opportunities.
Short-selling
An advanced trading strategy to try and profit from a security's potential decline in price.
Margin, risk, and position-sizing
Even the most experienced traders make mistakes that can limit their returns or, worse, cost them serious money. Here are some ideas to help avoid common pitfalls.
Option trading strategies: the foundation
Multi-leg and advanced strategies
Debit and credit spreads
Spreads that give you more control in defining your profit and loss.
Straddles and strangles
Bet on how much a stock moves, instead of whether it goes up or down.
Iron condors
A strategy with defined risk that lets you trade on the expectation that a stock price won’t move much.
Butterfly strategies
A versatile maneuver that allows you to trade with a chance for high returns while strictly limiting your risk.
Options earnings strategies
Earnings season creates big moves. Here's how to capitalize on volatility without getting burned.
Mastering execution and efficiency
Advanced use of the Greeks
Nailing these calculations can help you see more clearly when markets are unpredictable.
Tax considerations
Learn how your options profits are taxed—and how to use capital losses and ACB to reduce what you owe.
Six silly mistakes options traders tend to make
Even the most experienced traders do things that either limit their returns or cost them serious money. Here’s how to avoid falling into the same traps.