Options & Leverage 101
Start here. These lessons take you from zero to placing your first leveraged options trade with confidence.
Reality check: Options and leverage can produce huge gains — and huge losses. This is education, not financial advice. Never trade money you can't afford to lose.
An option is a contract that gives you the right — but not the obligation — to buy or sell an asset at a set price (the strike) before a set date (expiration). You pay a small fee called the premium for that right. It's a leveraged way to control shares without buying them outright.
Key terms glossary
Strike price
The price at which you can buy (call) or sell (put) the asset if you exercise the option.
Premium
The price you pay to buy the option contract. This is your maximum risk on a long option.
Expiration
The date the option contract becomes void. After this, the right disappears.
In the money (ITM)
When the option has intrinsic value — a call is ITM when the asset trades above the strike.
Out of the money (OTM)
When the option has no intrinsic value yet — a call is OTM when the asset is below the strike.
Leverage multiplier
How much your return is amplified relative to the underlying move. 5x means a 10% move = 50% on your capital.
Stop loss
The price at which you exit to cap your loss. We publish one on every pick — use it.
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