Alright, let’s begin your Options Puppy options sharing for fans – Chapter One 🐾📚.
why I do this many wanted to ask me where to start . Hard to answer one by one
Chapter 1: The Basics of Options – The Gentleman’s Agreement in Finance 🎩
Imagine the stock market is like a giant shopping mall where you can buy and sell pieces of companies, called shares. An option is like a special VIP coupon that gives you a choice—not an obligation—to buy or sell shares at a certain agreed price within a certain time frame.
In finance, these “VIP coupons” are called Call Options and Put Options.
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1. What is an Option?
An option is a contract between two parties:
• Buyer of the option – Pays money (called a premium) to have the right to do something in the future.
• Seller of the option – Receives the premium and must honor the agreement if the buyer wants to use their right.
An option always has:
1. Strike Price – The agreed price where the trade will happen if the buyer exercises the option
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2. Expiry Date – The deadline by which the buyer must decide to exercise or let it expire.
3. Premium – The price paid for the option itself.
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2. Types of Options 🥡
There are two main flavors:
Call Option 📈 – The Right to Buy
When you buy a call option, you’re buying the right (but not the obligation) to purchase the stock at the strike price before the expiry date.
Think of it like reserving an iPhone at today’s price, even if Apple raises prices next month
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Example:
You buy an IWM 221 Call expiring Aug 11 for $1.21 (premium per share).
• Strike Price: $221
• Expiry: Aug 11
• Contract Size: 100 shares
• Total Cost: $1.21 × 100 = $121
If IWM goes up to $225 before Aug 11, you can still buy it for $221 and instantly have a profit. If it stays below $221, you’ll likely let it expire and lose the $121 premium.
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Put Option 📉 – The Right to Sell
When you buy a put option, you’re buying the right to sell the stock at the strike price before expiry.
Think of it like insurance—you lock in a selling price even if the market drops.
Example:
You buy an IWM 221 Put expiring Aug 11 for $2.31.
• Strike Price: $221
• Expiry: Aug 11
• Total Cost: $2.31 × 100 = $231
If IWM falls to $215, you can still sell it for $221 and pocket the difference (minus the premium). If IWM stays above $221, you let the option expire.
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3. Strike Price – The Agreed Price 🤝
The strike price is like the handshake deal between you and the market. It’s the price at which you can buy (call) or sell (put) the stock if you exercise your right.
In your screenshot:
• 221 Call means you can buy IWM for $221.
• 221 Put means you can sell IWM for $221.
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4. Expiry Date – The Deadline ⏳
Options have a ticking clock. Once the expiry date passes, the contract disappears—like a concert ticket after the show.
If you don’t use (exercise) your option before expiry, it becomes worthless, and you lose the premium paid.
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5. How to See This in Real Life 🖥
Go to your stock trading app:
1. Click on the stock (e.g., IWM).
2. Tap the Options tab.
3. You’ll see columns for Strike Price, Call Premiums, and Put Premiums.
4. Choose the expiry date and strike price that fits your strategy.
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6. Example Walkthrough from Your Screenshot
Let’s say IWM is trading at $220.90 now.
• 221 Call: Last price $1.21
If IWM rises above $221 by expiry, this becomes valuable.
• 221 Put: Last price $2.31
If IWM falls below $221 by expiry, this becomes valuable.
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7. Buyer vs Seller Perspective 💼
• Buyer of Call → Bullish, expects stock to rise.
• Buyer of Put → Bearish, expects stock to drop.
• Seller of Call → Bearish or neutral, hoping the stock stays below strike.
• Seller of Put → Bullish or neutral, hoping the stock stays above strike.
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8. The Golden Rule of Options 📜
When you buy an option, your maximum loss is the premium you paid.
When you sell an option, your potential loss can be much larger (sometimes unlimited for calls). That’s why beginners usually start with buying options before learning the risks of selling them.
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Disclaimer
This is just an example for educational purposes. It’s not financial advice, and you should not buy or sell options based solely on this guide. Always understand the risks and consult a licensed financial advisor before trading.
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If you want, I can make Chapter Two about How Options Pricing Works & Why Premiums Go Up or Down, so you’ll know exactly why your IWM 221 Call changes in value during the day.
@Wrtd @CaptainTiger @Daily_Discussion @TigerEvents @TigerEvents
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