Free ebook explaining beginner options trading, calls, puts, pricing, Greeks, covered calls, cash-secured puts, and risk management.
Free ebook content
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Options Trading for Beginners: How Options Contracts Work
+ Exercise: In a typical U.S. equity option with a 100-share multiplier, a quote shows Bid 1.20 and Ask 1.35. If you want to buy 1 contract immediately, what price should you reference and about how much would it cost (ignoring fees)?
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Calls and Puts: Payoffs, Break-Even Points, and Common Misunderstandings
+ Exercise: You sell (write) an uncovered call option with strike K = 55 and receive a premium of $2. At expiration, above what stock price do losses begin for the short call position?
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Pricing Basics: Intrinsic Value, Extrinsic Value, and Time Decay
+ Exercise: A stock is at 105 and you’re looking at a call option with strike 100 and a premium of 7.80 (per share). Which split of the premium into intrinsic and extrinsic value is correct?
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How Options Behave: Volatility, Implied Volatility, and Why Premiums Expand
+ Exercise: A stock stays near $100 all day, but a 30-day at-the-money option rises from $3.00 to $3.80. What is the most likely explanation?
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Greeks for Beginners: Delta, Theta, Vega, and Gamma (High-Level and Practical)
+ Exercise: An options trader wants a position that is more forgiving on timing but will be more sensitive if implied volatility (IV) changes. Which choice best matches that risk profile?
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Order Mechanics: Position Sizing, Slippage, and Using Limit Orders
+ Exercise: When trading options with a wider bid-ask spread, what is the best reason to use a limit order instead of a market order?
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Conservative Strategy: Covered Calls as a Stock-Plus-Income Approach
+ Exercise: In a covered call, what is the main trade-off made to collect option premium as income?
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Conservative Strategy: Cash-Secured Puts to Enter Stock at a Target Price
+ Exercise: Which description best matches the purpose and main trade-off of selling a cash-secured put?
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Assignment and Exercise: What Happens at Expiration and Before It
+ Exercise: You sold a call option and it is exercised by the holder. What does assignment typically mean for you as the seller?
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Risk Management for Beginner Options: When Options May Be Inappropriate
+ Exercise: Which situation best matches the framework’s guidance that options trading may be inappropriate right now?
About the free ebook
Options Trading for Beginners: Calls, Puts, and Safer Starter Strategies
This free ebook introduces options trading in clear, practical language for readers who want to understand how contracts can be used alongside stocks. Learn the core differences between calls and puts, how premiums work, and why an option’s value can change even when the underlying stock barely moves.
Build a foundation before placing a trade
Options involve deadlines, strike prices, premiums, and market conditions that can create substantial risk. This guide explains key ideas such as intrinsic and extrinsic value, time decay, implied volatility, and the major Greeks. The focus is on understanding what affects a position rather than treating options as a shortcut to fast profits.
Explore defined, stock-based approaches
Readers examine covered calls and cash-secured puts as conservative, stock-centered strategies. These approaches still carry risk, including assignment and losses from stock price movements, but they provide a useful framework for learning how obligations and premiums interact.
Make risk management part of the decision
The ebook covers position sizing, limit orders, slippage, exercise, assignment, and situations where options may not be appropriate. Options are not suitable for every investor. Use this educational resource to develop a more informed process, understand potential outcomes before entering an order, and consider professional financial advice when needed.
What is the difference between a call option and a put option?
A call gives the holder the right to buy shares at a strike price; a put gives the holder the right to sell shares at that price.
What happens if a covered call is assigned?
The call writer may be required to sell the shares they hold at the option’s strike price.
How does time decay affect option premiums?
As expiration approaches, an option’s extrinsic value generally declines, all else being equal.
This ebook includes:
10 content chapters
Digital certificate of course completion (Free)
Exercises to train your knowledge
100% free, from content to certificate
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