- Call, put
- A long call is the right, not the obligation, to buy the underlying at the strike until expiration; it gains as the underlying rises. A long put is the right to sell at the strike; it gains as the underlying falls. Both cost a premium, and the premium is all a long option can lose.
- Strike, moneyness
- The strike is the price the right is struck at. A call whose strike is below the current price is in the money (ITM); at it, at the money (ATM); above it, out of the money (OTM). Puts mirror this.
- Expiration, DTE
- The last day the right exists, counted here in days to expiration. A thesis that needs ten days cannot be expressed in a contract that ends on day seven.
- Premium, breakeven
- What the contract costs per share, times the multiplier (100) per contract. At expiration a call is worth what the underlying exceeds the strike by, so it breaks even at strike plus premium; a put at strike minus premium.
- Delta
- How much the premium moves for a 1.00 move in the underlying. A 0.53-delta call gains about $0.53 per share when the underlying rises $1. The table shows its absolute value so calls and puts read alike.
- Theta
- What one day's passing costs the premium, all else equal. A long option pays it every day, and faster as expiration nears.
- Vega, implied volatility
- Implied volatility (IV) is the size of move the market has priced in. Vega is what one IV point is worth to the premium: a long option gains when IV rises and loses when it falls, even if the underlying does nothing.
- Bid, ask, spread
- The bid is what you can sell for now; the ask is what you must pay. The gap is paid twice, in and out, and as a fraction of the midpoint it is the friction the plan has to beat.
Lesson · Market Structure
Options contract selection
Translate a directional thesis into a long call or long put deliberately. Compare expiration, moneyness, directional sensitivity, time decay, volatility exposure, and quote quality instead of buying the cheapest contract. The drill at the end is the whole decision: choose the contract whose expiration outlasts the thesis, whose strike you can defend, and whose spread you have priced into the plan.
This lab covers long options only
The words the table uses
Options Trading teaches options properly. This lesson needs only enough to read its own chain, so here is that much and no more.
The contract decision stack
Start with the underlying thesis. The option is a wrapper around that thesis, not a substitute for it.
1
Direction
A long call expresses bullish exposure; a long put expresses bearish exposure. Define the chart invalidation first.
2
Time
Expiration must outlast the thesis. Extra time adds premium and changes theta and vega exposure.
3
Strike
Moneyness changes premium, delta, intrinsic value, and how much underlying movement the contract captures.
4
Liquidity
Evaluate the bid/ask spread and actual market depth. A good thesis can be damaged by expensive entry and exit friction.
Synthetic option-chain explorer
Select a row to inspect the tradeoffs. Prices and Greeks come from a simplified European-style model—not live quotes.
Exit-value simulator
Estimate how the selected long option may respond to price, elapsed time, and unchanged IV. This is a model sensitivity exercise.
10
$108.00
Quote-quality evaluator
Enter an actual or hypothetical bid and ask. The spread is part of the cost of entering and exiting.
Midpoint$4.16
Spread$0.24
Spread / mid5.8%
Meaningful friction. Include the spread in entry, exit, and break-even planning.
Contract-selection drill
Score 0 / 0Choose the contract that best satisfies the stated constraints—not simply the lowest premium.
!
Long calls and puts can expire worthless.
This lab does not model assignment, exercise decisions, taxes, commissions, early exercise, broker approval, or suitability. Review the standardized options risk disclosure before trading.