Lessons
🎯 Options
Calls, puts, greeks, spreads. Sculpted risk for advanced traders.
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Calls & puts
The right, not the obligation: the contract at the heart of every option.
- The right, not the obligationYou finished the Trading course. Now we sharpen the scalpel. An option is a contract that gives you the RIGHT…
- Calls: the upside ticketA CALL is the right to BUY the underlying at the strike price. Say a stock trades at €98 and you pay a €5…
- Puts: the insurance policyA PUT is the mirror image: the right to SELL at the strike. Own shares at €90 and buy a €90-strike put, and no…
- Moneyness & the chainOpen an option chain and you'll see a menu: dozens of strikes, several expiries, calls on one side, puts on…
- Unit review: the contractOne contract, two flavours: a call is the right to buy at the strike, a put is the right to sell. The buyer…
Pricing intuition
Intrinsic, extrinsic, theta and IV: what a premium is really made of.
- Two kinds of valueEvery option price splits cleanly in two. INTRINSIC value is what exercising right now would earn: hard cash…
- Melting ice cubesExtrinsic value is a melting ice cube. Every day that passes, there's less time for 'what could happen', so…
- IV: the price of movementIn League 5 of the Trading course you met implied volatility (volatility as 'the fifth asset'). Options are…
- Two sides of one coinThere's a beautiful piece of symmetry hiding in options. Own a stock and buy a protective put: below the…
- Unit review: what you pay forA premium = intrinsic value (hard fact) + extrinsic value (priced possibility). Extrinsic melts daily (that's…
The greeks
Delta, theta, vega, gamma: the four dials on every option's dashboard.
- Delta: your direction dialDELTA answers one question: if the stock moves €1, how much does my option move? A 0.50-delta call gains about…
- Theta: the daily rentYou met time decay in Unit 2. Theta is its dial. Read it like rent: theta −€0.05 means holding this option…
- Vega: the volatility dialVEGA measures how much your option's price changes when implied volatility moves one point. Vega 0.20? IV…
- Gamma: delta in motionDelta isn't fixed. It changes as the stock moves, and GAMMA measures how fast. High gamma means your direction…
- Unit review: the dashboardDelta: your direction, in share-equivalents. Theta: the daily rent. Vega: your exposure to the price of…
Buying options well
Defined risk, lottery tickets and IV crush: buy movement without burning the account.
- Defined risk: the honest superpowerRemember leverage from the Trading course? Margin calls, liquidations, positions blown up by a single…
- The lottery-ticket trapFar out-of-the-money weekly options are the scratch cards of finance: €0.10 a ticket, screenshots of 50x…
- Earnings & the IV crushThe Trading course warned you about trading into earnings. Options add a twist. Before a known event, IV…
- Sizing: the premium is the riskThe Trading course drilled the 1% rule: never risk more than 1% of your account on one trade. With stocks…
- Boss: The foundationCall break-even = strike + premium = €50 + €4 = €54. Below that, being right on direction still isn't enough.
Vertical spreads
Trade some upside for a hard ceiling on loss. It's the spread trader's first tool.
- Why spreadIn League 1 you learned that a lone long call bleeds theta every day and gets crushed when implied volatility…
- Debit spreadsStock at €100. You buy the €100 call for €5 and sell the €110 call for €2, both the same expiry. Net cost: €3…
- Credit spreadsLeague 1 warned you about naked short options: sell a put alone and a crash can vaporise your account. A…
- Choosing strikesPicking strikes for a credit spread is one dial with two ends: probability and payout. Sell far from the money…
- Verticals: unit reviewBuy one, sell one, same expiry. Pay a debit to bet on movement; collect a credit to bet against it. Max…
Covered calls & cash-secured puts
Renting out shares and getting paid to bid: income strategies, priced honestly.
- The covered callYou own 100 shares at €40. You sell one €44 call expiring next month and collect €1 per share. It's like…
- Cash-secured putsYou'd happily buy a stock you like at €45. It trades at €50. Instead of leaving a limit order, you sell the…
- The wheelThe 'wheel' chains the last two lessons into a loop: sell cash-secured puts until you're assigned shares, then…
- The 'free income' myth'Earn 2% a month on stocks you already own!' Every yield has a source. That's Formiga's oldest rule. Option…
- Income strategies: unit reviewCovered call: rent out shares you own, cap your upside. Cash-secured put: get paid to bid, but assignment…
Iron condors & range trades
Selling both tails at once: profiting from boredom, with the risk boxed in.
- Selling the rangeStock at €100 and, in your view, going nowhere for a month. An iron condor turns that boredom into a position…
- Defined risk, both sidesTake a condor with €5-wide wings sold for a €2 total credit. If the stock blows through one side, that spread…
- The volatility edgeWhy would selling ranges make money at all? Because options are priced off IMPLIED volatility, and…
- Managing losersYour condor's short put is at €90 and the stock slides from €100 to €92. The put side is now 'tested'. Forums…
- Condors: unit reviewA condor is two credit spreads (one under the market, one over), paid as one credit, with only one side ever…
Managing the book
Rolls, profit rules, assignment surprises: running a spread book like a professional.
- Rolling'Just roll it' is the most repeated advice in options forums. A roll is nothing mystical: you close your…
- The 50% ruleYou sold a spread for €2.00. Weeks later you can buy it back for €1.00: half the max profit, banked, with time…
- Assignment & expirationExpiration is where paper positions become real shares. In-the-money options are exercised automatically at…
- The income trader's disciplineOne condor is a trade; twelve open positions are a book, and the book has risks no single ticket shows. Size…
- Boss: The spread traderWidth €10, debit €4, so max profit = €10 − €4 = €6, reached at or above €90 at expiry. Max loss is the €4…
The volatility surface
Skew, term structure and IV rank: the 3D map every options pro trades from.
- The smirk: why puts cost moreBefore October 1987, index options were priced almost flat, with puts and calls at similar IV. Then Black…
- Near and far: term structureLine up the SAME strike across different expiries and IV changes with time: that's the term structure. In calm…
- IV rank: expensive compared to what?Is 30% IV cheap or expensive? Impossible to say. For a sleepy utility stock it would be screaming panic; for a…
- The surface: what pros actually seePut skew and term structure together and you get the volatility surface: IV plotted across every strike AND…
- Review: the map in your headOne unit, one object: the volatility surface. Skew tilts IV across strikes (crash memory since 1987), term…
Event trading
Expected moves, straddles and binary gaps: trading the calendar like a pro.
- The expected moveBefore every earnings report, the options market publishes its forecast in plain sight: the at-the-money…
- Straddles & stranglesBuy a call AND a put and you no longer care which way price goes, only that it GOES. That's the long straddle…
- Earnings the pro wayAmateurs ask 'will the report be good?' Pros ask 'is the PRICED-IN move too big or too small?' If the straddle…
- Binary events: gaps have no mercySome events don't move price. They teleport it. An FDA verdict can gap a biotech ±50% overnight; a hot…
- Review: the event playbookRead the expected move from the straddle. Decide if it's too big or too small versus your own estimate…
Futures & perps
Obligations, basis, funding and hedges: the contracts professionals run on.
- Futures: the obligationFutures were born in the 1800s grain trade: a farmer and a miller lock in today a price for wheat delivered…
- Basis, contango and the rollSpot is the price of the thing NOW; the future is the price of the thing LATER, and the gap between them is…
- Perpetuals: crypto's inventionIn 2016, crypto exchange BitMEX popularized a strange beast: a futures contract with NO expiry date. But…
- Hedging with futuresAirlines short jet-fuel risk with oil futures; farmers lock in harvest prices; funds fearing a rough quarter…
- Review: contracts with teethOne unit, two centuries: binding obligations settled daily in cash, a curve whose shape (contango or…
Portfolio hedging
Puts, collars and tail hedges: what protection really costs, and when it's worth it.
- Protective puts: the price of sleepHold your assets, buy a put beneath them: below the strike, every further loss is the insurer's problem. It's…
- Collars: protection on a budgetPuts too expensive? Pay for them with upside you were willing to spare: keep the asset, buy a put below, SELL…
- Tail hedging: paying for lightningTail hedging holds a permanent stash of far-out-of-the-money puts: cheap lottery tickets against catastrophe…
- The graduate's synthesisThree leagues in, the whole truth is simple: options are risk-sculpting tools. They cap losses, finance…
- Boss: The vol traderLeague 1's founding idea still rules: the long option's premium is the whole worst case. The naked put and…