Options trading

The appeal of options trading is the “leverage” they provide.

Since 1 option contract controls 100 shares of the underlying asset, buying a call option contract exposes the gains and losses of 100 shares at a fraction of the price of 100 shares.

In this article, we will cover option contract trading. Since you've made it to this article, I assume you already know what "option contracts" are. I skip covering what an "option contract" is because that information is available everywhere online.

For the retail traders

“call options” and “put options” for retail traders are bets on the direction of the asset price.

They purchase a “call option” if they believe the price will increase

They purchase a “put option” if they believe the price will decrease.

(Please do not do this. You will lose your money. It will gradually become a generous contribution to a hedge fund manager’s whine collection)

You have learned in school, on television, or YouTube how to visualize atoms, protons, neutrons, electrons, etc.

This model is entirely inaccurate, yet we use it because it helps us visualize the…