Learn Options
Use these guides to connect option contracts and pricing concepts to worked examples. Start with the calculator walkthrough, or choose a specific question below. Examples use standard U.S. equity/ETF option conventions; translations do not change those contract assumptions.
Calculator walkthroughs and worked examples
How to Use the Options Profit Calculator
Build a hypothetical position, compare prices and dates, and understand model premiums, payoff graphs and position Greeks.
Why Is a Debit Spread Below Maximum Profit Before Expiration?
Compare the same in-the-money spread at several remaining times, with a complete numerical example.
Options Profit vs. Return: Which Percentage Are You Looking At?
Separate dollar profit, return on premium, return on maximum risk, and the percentage shown by a graph comparison.
Covered Call Premium vs. Total Return
Follow a stock-and-call ledger to see how premium can accompany an overall loss, with capped gains, early closing and named return denominators.
Foundations
Options Basics
Call and put rights, contract premiums, expiration value and share transactions created by exercise.
Calls
The buyer’s purchase right and seller’s sale obligation, including covered and uncovered positions.
Puts
The sale right, its use in protecting shares, and the purchase obligation accepted by a put seller.
Long vs. Short Options
Opening and closing trades, price direction, position size and the obligations of combined positions.
Strike, Premium, and Moneyness
How the underlying price and strike determine intrinsic value, and how the premium enters the trading result.
Pricing and valuation
Intrinsic and Extrinsic Value
The two components of an option’s price and the value of retaining its exercise right.
How Options Are Priced
Pricing inputs, European and American valuation models, and the full European pricing formulas.
Implied Volatility
Deriving volatility from a premium, interpreting its annualized scale, and comparing strikes and expirations.
Options Greeks
How changes in price, time, volatility and interest rates affect option value, with sensitivity formulas and position scaling.
Does Theta Decay Over Weekends?
Compare weekend time decay with unchanged last-trade prices, using Friday-to-Monday repricing and stock-price or volatility alternatives.
Positions and risk
Spreads and Multi-Leg Positions
How quantities, strikes and expirations change the payoff and exposure of combined options.
Call Debit Spread vs. Put Credit Spread
Compare matching expiration profits and losses despite opposite opening cash flows, and see where financing and assignment differ.
Payoff and Break-Even
Single-option and spread calculations, including payoff regions, break-evens and maximum results.
Risk, Margin, and Assignment
Option losses, account collateral and share funding when a spread’s short put is assigned.
Trading and settlement
Options Chains and Quotes
Reading contract listings, bid and ask prices, quoted size and calculated values.
Orders, Volume, and Open Interest
Order execution, package trades and the accounting behind activity and outstanding contracts.
Expiration, Exercise, and Assignment
Exercise rights, allocation to sellers, settlement and decisions near expiration.
Time horizons
0DTE Options
Final-day payoff, changing sensitivity near the strike, and settlement after trading ends.
LEAPS
Long-dated contracts, their cost and changing value, and the differences between holding, exercising and rolling.
Reference
Options Glossary
Definitions of contract, pricing, strategy and trading terminology.