Options 101

What you'll learn

• ✓Define calls and puts
• ✓Draw a payoff diagram

Lessons

1. 🎟️
   The Ticket

   A right, not an obligation
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2. Calls and Puts

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3. Payoff Diagrams

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4. Time, Value, and 1973

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5. Options in the Wild

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6. Final Boss: Options in the Wild

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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

• Options, Futures, and Other Derivatives (Hull)
  Pearson · book
  Primary textbook reference for option mechanics, ITM/ATM/OTM definitions, payoff diagrams, intrinsic vs time value, and American vs European exercise styles.
• Options Institute Education
  Cboe Global Markets · institutional
  Educational source for option vocabulary, payoff structures, and the historical record of CBOE's April 26, 1973 launch with 16 underlying stocks and 911 contracts.
  https://www.cboe.com/optionsinstitute/
• Characteristics and Risks of Standardized Options
  The Options Clearing Corporation (OCC) · institutional
  Regulatory disclosure document used for risk descriptions: capped loss for buyers, theoretically unlimited loss for naked call sellers, and large but bounded loss for short put sellers.
  https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document
• The Pricing of Options and Corporate Liabilities (Black and Scholes, 1973)
  Journal of Political Economy · academic
  Cited only as a date marker tied to the 1973 emergence of listed options trading. No math from the paper is taught in this module.
• Dollar Costs of Retail Options Trading (Heimer and Simon)
  Journal of Financial and Quantitative Analysis (forthcoming / 2024) · academic
  Empirical evidence that retail option traders lose money on average, used in the boss lesson disclaimer about leverage and retail performance.
• Retail Investors and Options (DeHaan, Li, and Zhou, 2023)
  Working paper / SSRN · academic
  Additional academic evidence on retail options trading performance, costs, and short-dated OTM behavior, supporting the disclaimer in lesson 6.
• FINRA Investor Insights: Options
  Financial Industry Regulatory Authority (FINRA) · institutional
  Plain-language regulator warning about options leverage and risk, supporting the boss lesson disclaimer for retail learners.
  https://www.finra.org/investors/insights/options
• Cboe S&P 500 BuyWrite Index (BXM) Methodology
  Cboe Global Markets · institutional
  Used in lesson 5 to describe the BXM as a passive monthly covered-call strategy on the S&P 500, including the mechanics of selling slightly OTM one-month calls.
  https://www.cboe.com/us/indices/dashboard/bxm/
• SEC Staff Report on Equity and Options Market Structure Conditions in Early 2021
  U.S. Securities and Exchange Commission · institutional
  Used to ground the GameStop January 2021 short-dated call activity example in lesson 5.
  https://www.sec.gov/files/staff-report-equity-options-market-struction-conditions-early-2021.pdf
• Historical CBOE records: April 26, 1973 launch
  Cboe Global Markets / Options Institute history pages · reference
  Source for the specific facts that day one of CBOE trading involved 16 underlying stocks and 911 contracts, used in lesson 4.