Unit 4 · Level 1 · Buying options well

Boss: The foundation

Defined risk, lottery tickets and IV crush: buy movement without burning the account.

Free to play. No ads, no token, no account needed to start.

What you get asked

You buy a €50-strike call for €4. Where is break-even at expiry?
Call break-even = strike + premium = €50 + €4 = €54. Below that, being right on direction still isn't enough.
Stock at €120; the €100-strike call trades at €23. Its extrinsic value is…
Intrinsic = €120 − €100 = €20, so extrinsic = €23 − €20 = €3. Fact first, possibility on top.
Match each greek to what it measures.
The full dashboard: direction, time, volatility, acceleration. Check all four before every trade.
Earnings are tonight and IV is pumped. You buy a call anyway. The stock rises 3% tomorrow. Likeliest outcome?
You bought volatility at its most expensive hour, and the event deleted it. To win through earnings, the move must beat the move already priced in.
Buying options is defined-risk: your worst case is the ___ you paid.
No margin calls, no liquidations: the maximum loss was printed on the ticket. Just remember that hitting it is common, not rare.
€20,000 account, 1% rule, the premium treated as the full risk. Max spend per options trade?
1% of €20,000 = €200 of premium. Contract rights, pricing, greeks, discipline: the foundation is laid. League 2 builds on it. 🐜

Defined risk, lottery tickets and IV crush: buy movement without burning the account.