: Realized if the stock price moves above the strike price plus the premium paid. Long Put (Bearish) Goal : You expect the stock price to fall . Right : You can sell the stock at the strike price. Risk : Limited to the premium paid.

: The predetermined price at which the stock can be bought or sold.

When you buy an option, you have the , but not the obligation , to trade the stock. Long Call (Bullish) Goal : You expect the stock price to rise . Right : You can buy the stock at the strike price. Risk : Limited to the premium paid.

: This is the price you pay (as a buyer) or receive (as a seller) for the contract. If an option is quoted at , the actual cost is

When you sell an option, you receive the premium upfront but take on an if the buyer chooses to exercise their right. Short Call (Bearish or Neutral) Options Trading Basics | How to Buy & Sell Calls and Puts

: One standard equity option contract typically controls 100 shares of the underlying stock.

: The "deadline" for the contract. Unlike stocks, options do not last forever; they expire on a specific date. 2. Buying Options (Going "Long")

Before placing a trade, you need to understand the basic mechanics: