OPTIONS

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MODULE 1

1. What is a financial option?

4. Real-world style case: Vines Raises

MODULE 2

MODULE 3

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2. Types of options

3. What’s "strike", "premium" and "expiration"?

5. Why use options?

1. What is a financial option?

Simple definition: An option is like paying for a reservation. It gives you the right (not the obligation) to buy or sell a stock at a fixed price in the future.

Everyday example: You pay $10 to reserve a TV on Black Friday at $400. If the price goes up to $600, you win. If not, you only lose $10.

2. Types of options

Call option: You believe the stock will go up. Gives you the right to buy.
Put option: You believe the stock will go down. Gives you the right to sell.

Example with bread:

Call: Pay $5 to reserve bread at $20. If price rises to $30, you win.
Put: Reserve selling at $20, and price drops to $10 → big win.

3. What’s "strike", "premium" and "expiration"?

Strike price: The fixed price you agree to buy/sell at.
Premium: What you pay for the option.
Expiration: The deadline for the option to be used.

Everyday example: You pay $50 to reserve a phone at $400 (strike). If in 1 month it’s worth $500, you profit $100. If not, you lose only the $50 (premium).

4. Real-world style case: Vines Raises

Fake company "Vines Raises" ($VRS), stock is $10.

You buy a CALL $12 expiring in 1 month, pay $0.50
You control 100 shares → pay $50

Scenario 1 (Profit):

VRS rises to $15
You buy at $12, sell at $15 → $3 profit x 100 = $300
Paid $50 → net profit: $250

Scenario 2 (Loss):

Stock stays below $12 → you lose the $50 premium, not more.

5. Why use options?

Leverage: Earn more with less capital.
Protection: Hedge other investments.
Passive income: By selling options and collecting premiums.

6. Basic strategies

Buy Call – bullish
Buy Put – bearish
Covered Call – you own shares and sell calls
Cash-Secured Put – sell puts with cash ready in case exercised

6. Basic strategies