To The Moon

When people first get into options, the question they often ask is: “I’m bullish on this stock. Which Call should I buy?”

After a while, the questions change: Why can I lose money even when I get the direction right? Are strategies for sellers safer? Spreads seem like they can manage risk, but what should I watch out for when using them?

Many people go through these five stages as they learn about options. They aren’t a fixed progression: you might skip a stage or move back and forth between them. Read through to the end for a new‑trader surprise 🎁—then see which stage sounds most like you.

Stage 1: The eager beginner — “This contract is cheap. Why not give it a try?”

When you’re new to options, low-priced, deep out-of-the-money contracts can be tempting. You watch the underlying stock move and think: “What if it really reaches that price? I’m not putting in much—if it hits, I could make a lot.”

You start looking for opportunities every day and focusing on price moves, without paying much attention to how long the contract has until expiration or what affects its premium. You may not yet have considered what happens to time value if the market stays flat.

At this stage, start by learning to read an options contract. Is it a Call or a Put? What are the strike price and expiration date? What does the premium represent? And if you lost the entire premium, could you afford it?

Stage 2: The reality check — “Before I open a trade, I need a plan for when things don’t go as expected.”

After a few trades, many people realize that choosing a contract is only the beginning. How large should the position be? How much capital should you set aside? How would you exit if the market moved against you? What would you do if you were assigned? These are all questions to consider before opening a trade.

Strategies that involve selling options aren’t automatically lower risk. They also need a plan for sharp market moves.

It’s an important shift: from “I think it’ll go up or down” to “If I’m wrong, what will I do?”

Stage 3: The strategy collector — “I’ve learned so many strategies. Why can’t I decide which one to use?”

As you learn more strategies, new questions come up. You’re bullish on a stock, but suddenly there are so many choices.

Should you buy a Call, use a Bull Call Spread, or consider another structure? Each strategy may have its uses, and each comes with risks to understand. The more you research, the harder it can feel to choose.

A spread can change a trade’s payoff structure, but that doesn’t make its risks disappear. Beyond looking at the payoff diagram, ask yourself: Under what conditions could I lose money? What’s the worst-case outcome? If the market changes, will I know how to manage the position?

You don’t need to learn every strategy at once. It can be more useful to understand one clearly before comparing it with others.

Stage 4: The volatility watcher — “I want to understand what moves options prices beyond the stock price.”

After learning a few strategies, many people start paying attention to implied volatility (IV), IV Rank, and IV Percentile. They want to understand how volatility affects options prices.

At this stage, you’re looking beyond the underlying stock’s price moves and paying attention to expiration, premium, and volatility. But more indicators don’t automatically mean clearer answers. Volatility indicators can help you understand market conditions, but they can’t replace your own judgment.

Instead of reacting as soon as you see a number, try observing and keeping notes: How do the premium and IV of the same contract change over time? What happens to the contract when the underlying stock moves?

Stage 5: The risk-aware trader — “A position may look small on its own, but what does it mean for my whole account?”

Over time, you may start looking beyond whether a single trade could make money and consider the risk across your entire account.

If you hold stocks, ETFs, and options, how might your account be affected by a sharp market move? Do you have enough capital and margin? Could several positions amplify one another’s risks?

Trading may feel less exciting at this stage, but you may spend more time reviewing and making choices. Reducing a position, waiting, or not trading can all be part of a plan. Options are a tool; no single strategy works for everyone in every market.

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Which stage are you at now? What’s the first options topic you’d like to understand better? Share it in the comments.

Options involve significant risk. This post is for educational purposes only and is not investment advice. The total value of the Welcome Rewards is up to SGD 200; this does not represent cash or investment returns. Eligibility, claim, and usage requirements are subject to the terms on the promotion page.