Use this sequence to learn the mechanics before comparing strategies. Begin with stock options, then work through the rights, costs and obligations of a contract.

Learn the contract

  • Calls and puts: buyer rights and seller obligations.
  • Strike price, premium and moneyness: different quantities with different meanings.
  • Expiration and exercise and assignment: the exact series and broker deadlines matter.

Then examine the position

Match quantities to the actual deliverable, including adjusted contracts. Identify the maximum modeled loss, funding needs, fees and what happens if a short option is assigned. A limited-loss position can still lose a substantial amount.

The Strategy Finder compares payoff structures. The calculators illustrate common-expiration stock/ETF profit and loss; they do not predict returns or calculate margin.

Put your options knowledge to work

Practice the ideas in this guide with a 20-question options quiz. Start at Beginner and work through five levels, with explanations after every test.