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Option Trading Fundamentals on the Buy Side

The fundamentals of buying options — when buying calls or puts makes sense, what drives pricing, and how to manage risk as an option buyer.

0:59 Published YouTube

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What this one covers

  • Understand the fundamentals of buying calls and puts

The same thing, in writing

When you buy an option, you pay a premium for the right (not obligation) to buy or sell a stock at a specific price by a specific date. Buying calls is bullish — you profit when the stock goes up. Buying puts is bearish — you profit when the stock goes down. Your maximum loss is always limited to the premium paid. The key factors affecting your trade: stock direction (delta), time decay (theta), and volatility changes (vega). As a buyer, time works against you, so timing and volatility matter.

Topics

  • options basics
  • buying options
  • calls
  • puts
  • fundamentals

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Chains, IV rank, expected move and dealer positioning for 5,500+ US stocks and ETFs.

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