8 lessons about 25 minutes 16 quick checks final check: 8 questions Free, no sign-up
What an option actually is, what you pay for, and how contracts trade.
Your progress0/8 lessons
By the end you will be able to
- Explain what a call and a put give their holder, and what the seller takes on.
- Read a strike, an expiration and a premium, and split a premium into intrinsic and extrinsic value.
- Work out expiry values and break-even points for simple examples.
- Explain exercise and assignment, and why the bid/ask spread is a real cost.
Options Band · Course completion record
Options basics
completed all 8 lessons and passed the final check
A record of self-study kept in this browser. It is not an accreditation, licence or qualification.
Syllabus
work through in order; each lesson ends with a short check- ✓ What is an option?An option is a contract granting the right, not the obligation, to buy or sell a stock at a set price before a set date. 3 min
- ✓ Call optionsA call option is the right to buy 100 shares at a fixed strike price before expiration, in exchange for a premium. 3 min
- ✓ Put optionsA put option is the right to sell 100 shares at a fixed strike price before expiration, gaining value mainly when the stock falls. 3 min
- ✓ Strike price and moneynessThe strike is the option's fixed transaction price; moneyness describes where the stock trades relative to it. 3 min
- ✓ Expiration datesExpiration is the date an option ceases to exist; the time remaining is a major component of its price. 3 min
- ✓ Option premium: intrinsic and extrinsic valueAn option's premium splits into intrinsic value, its exercise value today, and extrinsic value, the price of time and possibility. 3 min
- ✓ Exercise and assignmentExercise is using an option's right; assignment is being selected to fulfill the obligation on the other side. 3 min
- ✓ Liquidity and bid/ask spreadsThe gap between an option's bid and ask is a real trading cost, and it varies widely with how actively the contract trades. 3 min
- ★ Final check8 questions · pass mark 6/8 · unlocks when every lesson check is done 4 min
Other courses
Your progress is saved in this browser only; clearing site data resets it. Educational content only: nothing in these courses tells you what to trade. Time estimates assume about 200 words a minute.