Learn Options Trading - Become a Professional Options Trader

Define option trading for beginners and explore its advantages and disadvantages, then cover the basic building blocks, types of options, the option chain, and reading P&L diagrams, with homework.

Explore how option trading turns contracts on the underlying into profit in up, down, or sideways markets, leveraging time and volatility, with buyers, sellers, brokers, and the OCC clearing.

Discover the advantages of options trading, including greater leverage with lower margin, market neutral strategies, income from selling options, unlimited upside, fixed risk, and insights from the put-call ratio.

Explore the disadvantages of options trading: you don't own the shares, dividend implications exist, time decay, lesser liquidity, and greater complexity.

Learn the basic types of options, calls and puts, and how premium, strike price, expiration, and money status (in, at, out) shape profit and loss.

Understand that the option premium is the price of each contract, paid by buyers and collected by sellers, determined by stock price, strike price, time to expiration, and volatility.

Strike price is the price at which an option can be exercised; calls buy at strike, puts sell at strike, with profits if the stock moves beyond strike.

Option expiration defines when option contracts cease to be valid, with monthly options expiring on third Friday and weekly or midweek expiries; you can exercise or close positions before expiration.

Clarify ATM, ITM, and OTM definitions using stock price versus strike price to show when an option is at, in, or out of the money, with simple examples.

Explore option profit and loss diagrams for calls and puts, showing break-even, strike prices, and expiration scenarios. Understand how PNL charts reveal risk and profit potential.

Explore the option chain, the tool for viewing calls and puts, prices, expiration dates, and strike prices. Interpret implied volatility, probability in the money, volume, and bid-ask to assess trades.

Practice reading the option chain on ThinkorSwim and study the option PNL diagram for calls and puts. Use a demo account to trade short-dated expiries and build foundational terminology.