Learn options trading from the ground up
This is the tutorial library for Wahsac Profit Pulse Capital. It teaches the mechanics of options trading in plain language, from what a call contract is through how to size a position and when to cut a loss.
Start with the contract itself
A call option gives you the right to buy 100 shares at a fixed strike price before a set expiration date. A put option gives you the right to sell. You pay a premium for that right, and the premium is quoted per share, so a contract priced at $2.40 costs $240.
Reading an options chain
The chain lists every available strike for each expiration. Strikes above the current share price are out of the money for calls and cost less. Strikes below are in the money and cost more because they already carry intrinsic value. Weekly contracts expire each Friday at 4:00 PM Eastern. Monthly contracts expire on the third Friday of the month.
Time value and decay
Every premium has two parts. Intrinsic value is the amount a contract is already worth if exercised today. Time value is everything you pay for the chance the stock moves in your favour before expiration. Time value shrinks every day, and it shrinks fastest in the final week. This is why a 30-day contract gives a thesis more room to work than a weekly one.
Position sizing and stop losses
Decide the maximum you will lose before you enter. A common rule is to risk no more than a small fixed percentage of your account on one contract. Then set an exit level and honour it. The alert emails in this platform exist to build that habit while the money is still virtual.
Practice before you commit
Run the same strategy across several expirations in the simulator and record the result. Patterns appear quickly. Most traders discover that their entries are fine and their exits are the problem.