Plain-English definitions of options terms. Each one is short: what it means, one worked example with play money, and where it bites. When a term has a lesson, the page points you to the simulator so you can feel it, not just read it.
Concepts
The price of the option itself: what buyers pay, what sellers collect, and why the quote moves your breakeven. One worked example with play money.
The line your option is measured against: how strike choice sets both the price and the odds, with three calls on the same stock compared side by side.
In, out, or at the money: what the labels really tell you, why puts flip the map, and why finishing in the money can still lose money.
Every option price splits into two parts: value you could bank right now and rent on time that always melts to zero. Knowing which part you actually paid for changes how every trade looks.
Buy or sell, call or put: four shapes cover every options trade. Drag the expiry price and watch which shapes cap your loss and which cap your gain.
Every option quote is two prices: the bid you can sell at and the ask you must pay. The gap between them is a toll you pay on the way in and again on the way out, before the option moves a cent.
Options melt as days pass even when the stock stands still. See the melt in numbers and why waiting is the quiet way buyers lose.
The moment an option's life ends: in-the-money options auto-exercise into stock, out-of-the-money ones vanish. What actually happens at 4:00pm on expiration Friday, and the traps to avoid.
When the seller of an option is forced to fulfill the contract: buy or sell 100 shares at the strike. One worked example, and why it surprises beginners.
What exercising an option actually means: turning the contract into 100 shares at the strike price. Why selling usually beats exercising, and the time value you burn by pulling the trigger early.
The market's estimate of how much the stock will move, backed out of the option price. Why pre-earnings options are secretly expensive, and what IV crush does to winners.
Delta, gamma, theta, vega: the four gauges on an option position and what each one is telling you. One worked example, and why income sellers should reread the gamma row.
Margin on a short option is not borrowed money: it is collateral your broker freezes against your worst case. Sell a put for $200 and watch $1,700 of buying power vanish, with more taken exactly when the market drops.