Options Basics

OK, maybe we're a little biased -- but in case you've never noticed, options offer several significant advantages over stocks, whether you're an active trader or a die-hard buy-and-holder. From leverage to limited risk, find out exactly how you can use options to raise your trading game to the next level. Enter your email below to download 5 Ways Options Are Better than Stocks.

Options Basics

ADVERTISEMENT

If you’re just beginning to learn about options, start here. Our Option Basics articles offer a beginner-friendly view on the nuts and bolts of calls and puts, whether you’re looking for basic definitions or a little more detail on the whys and hows.

Getting Started with Options — Find out what stock options are, how they derive their value, and the difference between calls and puts. You’ll also discover a variety of different ways you can use stock options to complement your investing portfolio, along with some advantages of trading options over stocks.

Key Option Concepts — Options are entirely different investing vehicles than stocks, and you need to learn the rules of the road before you proceed. In this section, we explain the intricacies of option pricing, including the unexpected impact implied volatility can have on your option’s value. Brush up on the benefits of leverage, and learn how stock splits and dividends can affect your option trade.

Options Trading Mechanics — There’s more than one way to enter an options trade — and there are a few different ways to exit the position, as well. Before you start trading, you need to learn the finer points of buying to open, selling to close, exercise, and assignment … and that’s just for starters. In addition, you’ll learn how to adjust an open position to account for changes in your forecast, and we’ll also review some important principles of money management to keep you trading options profitably.

Basic Options Vocabulary — Options trading comes with its own unique set of lingo, and the flurry of unfamiliar buzzwords and phrases can be daunting for newcomers. When it all starts sounding like Greek — even when you’re not researching delta, gamma, and rho — consult our handy glossary to decode the jargon.