Options 101 — Calls, Puts & How Options Work

Overview

Options give you the right (not obligation) to buy or sell an asset at a specific price before expiration. Learn the fundamentals of calls, puts, and how options contracts work. Explore our full options chains hub to see real-time contract data across every major ticker. Before risking real capital, sharpen your skills with our paper trading simulator and review key terms in the glossary.

Key Takeaways

• Call option: the right to BUY 100 shares at the strike price. Profits when the underlying goes up.
• Put option: the right to SELL 100 shares at the strike price. Profits when the underlying goes down.
• Each option contract controls 100 shares — a $2.00 option costs $200.
• Options expire worthless if they're out-of-the-money (OTM) at expiration — you can lose 100% of the premium.

Practical Tips

• Paper trade options for at least 1 month before using real money.
• Start with buying calls/puts (defined risk) before selling premium (potentially unlimited risk).
• Never trade weekly options as a beginner — the theta decay is brutal and the moves are amplified.