01
Stock options, from the start
What one contract actually obliges, who owes what to whom, and where the hundred shares come from.
01, 06
Six pages, in the order they build
02
Expiry, DTE and the 0DTE case
How days to expiry changes the arithmetic, and what collapses when that number reaches zero.
03
Cash-secured puts
The obligation you take on, the cash the broker holds against it, and the outcome at each price.
04
Covered calls
Selling a call against shares you hold: what it caps, what it cannot protect, and how assignment works.
05
Bear call spreads
Two legs, one net credit, and a maximum loss that is fixed at the moment you open it.
06
The option greeks
Five sensitivities, each answering one question: if that changes by one unit, what happens to the premium?
How options mechanics are laid out here
Every page in this section answers the same three questions in the same order, because the order is what makes options tractable. First: what does this contract oblige, and which party carries the obligation? Second: what does the premium buy, and when is it paid? Third: what happens at expiry under each possible share price? A surprising amount of confusion about options comes from starting at the third question, where the diagrams live, without having settled the first.
That is also why the pages are not organized as a ladder from safe to risky. Such a ladder cannot be built honestly. A covered call sounds conservative and caps a position's entire upside; a cash-secured put sounds aggressive and is fully collateralized in cash. Their risks are different in kind, not in degree, and ranking them would smuggle in the recommendation this reference does not make. The sequence here is pedagogical instead: contract, then expiry, then the two single-leg positions, then a two-leg spread, then the sensitivities.
The multiplier, stated once
A standard listed US equity option is written on 100 shares. Premiums are quoted per share, so a contract quoted at 3.00 costs 300 dollars before commission, and a strike of 50 represents 5,000 dollars of stock. This is the multiplier that turns a small-sounding premium into real exposure, and it is the reason the standard trading unit gives this site its name. Where a page shows a payoff diagram, the vertical axis is per share; multiply by 100 for the contract. The options payoff calculator prints both figures side by side for that reason.
What expiry does that nothing else does
Time is the only input to an option's price that moves in one direction and never stops. A share price can go up or down; implied volatility can expand or contract; the days remaining only fall. That asymmetry is why expiry gets its own page rather than a paragraph, and why the zero-days case is treated separately: on the final day the extrinsic part of the premium has almost nothing left to decay, so the contract stops behaving like an option and starts behaving like a leveraged bet on the closing price. The mechanics have not changed. The proportions have.
Assignment is the part people meet by surprise
Assignment is what happens when the party holding the right exercises it and the party carrying the obligation is held to it. For a seller this is not an edge case; it is the contract working as written. Each page here states plainly what assignment would mean for that position, 100 shares bought at the strike, 100 shares delivered out of the account, or one leg of a spread exercised against you while the other still stands. Reading those outcomes before opening a position is the entire practical value of understanding options mechanics.
FAQ
Reading this section
Do I need options approval to read any of this?
No, and you do not need an account either. These pages describe the contract and the arithmetic, which are public facts. Whether a broker will let you place a given options trade is a separate question decided by its approval tiers, and that belongs on the brokers pages rather than here.
Why is every example built on 100 shares?
Because a standard US equity option contract is written on 100 shares: one round lot. The quoted premium is per share, so a premium of 3 is a contract cost of 300 before fees. Almost every arithmetic mistake beginners make with options is a factor-of-100 mistake, which is why the multiplier is stated explicitly on every page in this section.
Are any of these strategies recommended here?
No. Each page states what the position obliges, what it costs, where it breaks even and how it can end. It does not say whether you should open it, and it never suggests one is safer or more profitable than another. A cash-secured put and a covered call are described in the same neutral register precisely because their risk is not equivalent.
Where do the option greeks fit in?
They are the sensitivities of the premium, not separate strategies. Once you know what a contract obliges, the greeks tell you how its price responds when the share price, the time remaining or the implied volatility moves. They are placed last in this section for that reason: they only mean something once the contract itself is clear.