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Course · Trading

Options Trading

Read option contracts and chains, calculate expiration payoffs, interpret volatility and the Greeks, and evaluate options strategies.

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CONTRACTPRICINGSTRATEGYASSIGNMENT STRIKE
Subject
Trading
Lessons
16
Format
Interactive

Overview

Read option contracts and chains, calculate expiration payoffs, interpret volatility and the Greeks, and evaluate options strategies.

What it teaches

To read a contract line and say who owes what and what cash moves; to give any position’s breakeven and maximum loss from strike and premium; to classify a strike and split a premium into intrinsic and extrinsic value; to price the bid-ask spread on the way in and out. To say which way time and volatility move a premium and to put numbers on both — a delta into dollars and share-equivalents, theta × days and vega × points against a full repricing. To build five positions and state each one’s cost, breakeven, most it can make and most it can lose. To say what an expiring position turns into, and to write a plan that ten checks approve, exported in a published shape.

Who it is for

Anyone who can read a chart and now wants to understand the instrument that trades on top of it — including the reader who has bought a call, watched the stock go the right way, and still lost money. It starts from contract terms, so no prior options knowledge is assumed. It also suits someone who already trades options and cannot say, without guessing, which part of a premium is intrinsic and which part is the clock.

Concept dependencies

Delta, gamma, theta and vega only mean something once option premium has been split into intrinsic and extrinsic value. Options strategies assume you can price the legs. Options Trade Planning asks for a spread cost, a risk budget and an exit rule, using the calculations explained in these lessons. Planning connects knowledge of contracts and strategies to decisions about risk.

Lessons

Explanations, examples, interactive tools, and practice questions.

16 lessons

Educational use only — nothing here is trading advice. Options involve risk and are not suitable for every investor. This course is educational: it provides no personalized investment advice and no live trading signals.

Modeling scope. Every price, chain, quote, scenario and outcome in these lessons is synthetic, and theoretical values come from a simplified European Black–Scholes model. The course does not model every listed-product feature, dividend, early-exercise decision, fee, tax, margin rule or market microstructure effect. Real results can differ because of spread, slippage, commissions, gaps, liquidity, assignment, exercise, implied volatility and time decay. Verify contract specifications, brokerage procedures, costs and the current Options Disclosure Document independently before trading.

Lesson topics

Contract basics

What you are actually buying, before any of it has a price. The terms written into every contract and who owes what; the four positions calls and puts can take; whether a strike is in, at or out of the money; what the premium is made of; and how to read the chain it is quoted on — including the bid-ask spread you pay on the way in and again on the way out.

None of the 16 lessons marked complete

  1. HOLDER RIGHT CONTRACT STRIKE EXPIRY ×100 WRITER DUTY PREMIUM
    Contracts Interactive lab

    Options Contract Fundamentals

    Decode option contract terms, holder rights, writer obligations, multipliers, premium cash flow, and expiration payoff.

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  2. LONG CALL SHORT CALL LONG PUT SHORT PUT
    Payoff Interactive lab

    Calls and Puts

    Compare long and short calls and puts using rights, obligations, payoff charts, breakeven, and maximum risk.

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  3. ITM ATM OTM CALL STRIKES STOCK
    Moneyness Interactive lab

    Moneyness

    Classify calls and puts as ITM, ATM, or OTM and calculate intrinsic value from stock and strike.

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  4. PREMIUM DEEP ITM OTM INTRINSIC EXTRINSIC
    Pricing Interactive lab

    Option Premium

    Decompose theoretical option premium into intrinsic and extrinsic value and change core pricing inputs.

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  5. STRIKE BID ASK VOLUME 95 4.10 4.25 100 2.40 2.55 105 1.05 1.45 SPREAD 0.40
    Liquidity Interactive lab

    Option Chain and Liquidity

    Read option-chain fields, quantify bid-ask friction, inspect activity, and evaluate a limit-order selection.

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Lesson topics

Pricing and the Greeks

Why the premium moves when the stock does not. Time decay — how extrinsic value drains as expiration approaches — implied volatility on its own terms, and the sensitivities that put numbers on both: delta and gamma for direction, theta and vega for time and volatility. Each lesson checks its estimate against a full repricing, so you can see where a linear approximation stops being true.

  1. EXTRINSIC VALUE 60D 30D 7D EXP
    Time decay Interactive lab

    Expiration and Time Decay

    Visualize long-option value by days remaining and inspect theoretical theta, intrinsic value, and extrinsic value.

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  2. HIGH IV LOW IV VALUE STRIKE INTRINSIC
    Volatility Interactive lab

    Implied Volatility

    Model option-value changes from IV expansion and contraction separately from underlying movement.

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  3. DELTA 1.00 DELTA ONLY GAMMA
    Greeks Interactive lab

    Delta and Gamma

    Compare delta-only and delta-plus-gamma estimates with full theoretical repricing and visualize delta across stock prices.

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  4. VALUE CHANGE THETA VEGA NET EST REPRICED
    Greeks Interactive lab

    Theta and Vega

    Apply time and IV shocks, compare theta-plus-vega estimates with full repricing, and visualize volatility-dependent decay.

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Lesson topics

Strategies

Positions assembled from contracts and pricing concepts, explored in five Lessons. Two are single long options, two pair an option with the shares or the cash to cover it, and two are vertical spreads — one paid for, one collected. Every lesson asks the same four questions of its structure: what does it cost, where is breakeven, what is the most it can make, and what is the most it can lose.

  1. MAX LOSS = PREMIUM STRIKE BREAKEVEN
    Long options Interactive lab

    Long Calls and Long Puts

    Plan long calls and puts with expiration breakeven, premium risk, modeled early-exit value, and payoff charts.

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  2. STOCK ONLY CAPPED COVERED CALL SHORT STRIKE
    Income Interactive lab

    Covered Calls

    Build covered calls, compare them with stock-only payoff, and calculate breakeven, maximum profit, and downside risk.

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  3. CASH HELD RESERVED MAX PREMIUM EFFECTIVE PRICE STRIKE
    Income Interactive lab

    Cash-Secured Puts

    Calculate cash reservation, effective purchase price, payoff, maximum premium profit, and downside risk for cash-secured puts.

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  4. MAX LOSS = DEBIT MAX PROFIT LONG SHORT
    Spreads Interactive lab

    Vertical Debit Spreads

    Construct bull call and bear put debit spreads and calculate debit, breakeven, maximum loss, and maximum profit.

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  5. MAX PROFIT = CREDIT MAX LOSS SHORT LONG
    Spreads Interactive lab

    Vertical Credit Spreads

    Construct bull put and bear call credit spreads and calculate credit, breakeven, maximum profit, and maximum loss.

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Lesson topics

Assignment and planning

How a position actually ends, and the plan you should have written before it started. Exercise, Assignment, and Expiration simulates expiration: which contracts are exercised, who gets assigned, what shares change hands, and where broker handling can surprise you. Options Trade Planning combines contracts, pricing and strategies into one scored plan — thesis, strategy fit, timing, spread cost, risk budget, event exposure and exit rules — and exports it.

  1. EXPIRY SETTLE ITM · ASSIGNED 100 SHARES MOVE OTM · NO ACTION EXPIRES WORTHLESS
    Assignment Interactive lab

    Exercise, Assignment, and Expiration

    Simulate expiration outcomes, exercise and assignment obligations, resulting shares, and broker-handling risks.

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  2. PLAN CHECKS 78 SCORE PLAN.JSON
    Planning Interactive lab

    Options Trade Planning

    Score a complete options plan across thesis, strategy fit, timing, spread, risk budget, event exposure, and exit rules.

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Recommended background

Trade planning, position sizing, and basic risk and reward calculations.

Interop

Options Trade Planning exports a trade plan

The Options Trade Plan lesson documents an options trade plan. It scores a complete plan and then hands it back to you as a file, so the plan can outlive the browser tab it was written in.

Format: options-trade-plan-v1

What comes out of it

Options Trade Planning takes the thesis, the contract, the risk budget and the exit rules you enter, scores them across ten checks, and exports the whole plan as a JSON document stamped options-trade-plan-v1. The file records the inputs, the computed metrics — breakeven, maximum loss, spread cost, risk budget — and the score with the individual checks that produced it, so a plan you approved can be read back later against what actually happened.

The schema linked beside this is the contract for that shape. It is worth reading if you would rather keep your plans in your own spreadsheet or script: match the shape and the same fields carry over. Everything runs in your browser — nothing is uploaded, and there is no account anywhere in this course.

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Further reading

The official references this course points at

The lessons are self-contained and work offline, but each one links out to the primary sources for what it teaches. These four organizations are the authority on contract specifications, rules and risk disclosure — this course is not.

Leaves this site

OIC · Options Industry Council Options Basics ↗ Contract mechanics, strategy pages and the Greeks, from the industry's own education body. The most-cited source across these sixteen lessons. FINRA Options ↗ The US broker-dealer regulator on options accounts, approval levels, assignment and the rules your broker operates under. SEC · Investor.gov An Introduction to Options ↗ The SEC's investor-education bulletin: plain-language definitions and the risk disclosure every new options account is required to receive. Cboe Options Calculator ↗ An exchange-published pricing calculator. Useful for checking the simplified model these lessons use against another implementation.