Options foundations and Greeks
Read contracts, premiums, exercise mechanics and the sensitivities behind option prices before studying strategies.
Browse the full library →Options Explained: Calls, Puts, Buyers and Sellers
An option is a contract with specific rights for its buyer and obligations for its seller. Start with the underlying, strike, expiration, premium and deliverable before looking at a strategy.
Concept explained · IntermediateHow to Read an Option Chain: Strike, Bid, Ask, Volume and Open Interest
An option chain organizes contracts by expiration and strike. Each row is a different instrument, and a displayed midpoint is not a guaranteed execution price.
Concept explained · IntermediateIntrinsic and Extrinsic Value: What an Option Premium Contains
Intrinsic value comes from the current stock price relative to the strike. Extrinsic value is the remaining premium; it reflects factors including time and uncertainty.
Concept explained · IntermediateExercise, Assignment and Expiration: What Actually Happens
Exercise uses an option’s contractual right; assignment allocates the corresponding obligation to a short position. Those events can create stock or cash obligations that a payoff chart alone does not show.
Concept explained · IntermediateThe Options Greeks: Delta, Gamma, Theta, Vega and Rho
The Greeks estimate how an option’s value responds locally to changes in price, time, implied volatility and interest rates. Read the units and the whole position, not just a single number.
Concept explained · IntermediateOption Delta: Price Sensitivity and Position Exposure
Delta estimates the premium change for a small move in the underlying. It also provides a local way to compare option exposure with shares, subject to changing conditions.
Concept explained · IntermediateOption Gamma: Why Delta Changes
Gamma estimates how delta changes when the underlying moves. It explains why a fixed-delta calculation becomes less accurate over larger price changes.
Concept explained · IntermediateOption Theta: Time Decay Without the Shortcuts
Theta estimates the option-price effect of passing time while other model inputs stay fixed. It is a local sensitivity, not a scheduled deduction from a brokerage account.
Concept explained · IntermediateOption Vega: Implied Volatility and Premium Sensitivity
Vega estimates how much an option premium changes when implied volatility moves by one percentage point. A forecast about stock direction alone does not describe this exposure.
Concept explained · IntermediateOption Rho: How Interest Rates Affect Option Values
Rho estimates the premium response to a change in the interest-rate input. It can matter especially for longer-dated options, but it must be separated from stock and volatility changes.
Concept explained · IntermediateImplied Volatility, Expected Moves and the Earnings IV Crush
Implied volatility is inferred from option prices using a model. It describes priced uncertainty under that model, not a directional prediction or a guaranteed trading range.