From a gpt with an eli5 prompt if it’s helpful. Think of a stock option like a special ticket you can buy for a toy store. This ticket isn't for buying a toy right now, but it gives you a choice to buy a specific toy at a specific price, let's say $10, anytime in the next month. Buying the Ticket (Option): You pay a little money to get this special ticket. This is like buying an option in the stock market. Deciding to Buy the Toy (Exercising the Option): Let's say the toy you like becomes very popular and its price goes up to $15 in the store. But since you have the ticket, you can still buy it for $10. This is a good deal! In stock options, if the stock price goes up higher than your special price (strike price), you can make a profit. Or Maybe Not Buying the Toy (Letting the Option Expire): What if the toy isn’t that popular and its price drops to $5? Then, you wouldn’t use your ticket because it says you have to pay $10. So, you just don’t use the ticket, but you did spend a little money buying it. In stock options, if the price goes down, you don’t have to buy the stock, but you lose the money you paid for the ticket. More on reddit.com

It all depends on what they are doing. Simply put, you can buy and sell options and those options get sold and bought by others. An option is a contract between a buyer and a seller to give the buyer an option to trade shares for a certain amount of money at a certain moment and the buyer of the option pays a premium for that right. When the contract is for buying shares it's a 'call' option and when the contract is for selling shares it's a 'put' option. The buyer then decides if they want to execute the option or let the option expire and don't use their rights. When you buy an option you pay an X amount of money, the premium, that allows you to either buy or sell an amount of stock at a certain price. So when you buy an option you can lose at most your premium by not executing it but you can potentially gain a lot of money if you predicted the share price correctly. Now when you sell an option you get paid the premium by the buyer and the buyer then gets the right to buy or sell the stock from/to you. As it's the buyers choice to execute the option you as a seller have no choice in the matter. So when you sell an option you can at most win the premium but you can potentially lose a lot of money. Money that you don't have because you never expected the price to go up that much. Let's say stock A is worth 10$ now. I think it will be worth 17$ in the futute, you think it will stay at 10$. I buy an option from you for 2$ per share for the rights to buy that share from you for 15$ at the end of January. And since I have a bit of money we agree that I will be able to buy a 1000 shares. So now I've given you 2000$. If the price is less than 15$ at the end of January I will let my option expire and have lost that premium. You have made a nice profit of 2000$. But imagine if that share actually rises to 100$ because the company made a miraculous discovery. I execute my right and buy a 1000 shares from you at 15$ and sell them for a 100$ immediately. I just made a 83.000$ profit by risking 2000$. However you didn't have those shares when we agreed to this so you now need to buy them for a 100$ a piece on the market and sell them for 15$ to me. You lost 83.000$ while you could at most have earned 2000$. Essentially buying an option is a huge potential profit with a set cost while selling an option gives a set potential profit with an essentially unlimited loss. Now there are methods to protect yourself such as only selling options for which you actually hold the shares. That way you cannot lose more than you own. More on reddit.com

Expect to spend a few months as there is a lot to learn! 5 hours is just a taste. ;-D Long = Buy. Theta decay works against these trades as this lowers the option price (extrinsic value) since long trades profit from the option price increasing, buying to open low and selling to close higher. Buy to Open for $1.00 and Sell to Close for $1.25 = 0.25, 0.25 X 100 = $25 profit per contact. Short = Sell. Theta decay works for short option to help them profit as you sell to open high and work to buy back lower to profit. Sell to Open and collect $1.25 and Buy to Close for $1.00 means keeping 0.25 of the credit for a $25 profit. Short selling refers to stocks borrowed from your broker and sold by you on the open market for the current price. You need to replace these shares and are expecting the stock to drop so you can buy them back later at a lower profit. Sell 100 shares short at $50 per share bring in $5,000 and your account will show -100 shares. If the stock price drops to $45 per share, you can buy +100 shares back for $4,500 and keep the $500 as profit. Starting with -100 shares short, then buying +100 shares to replace them, equals 0 shares and being out of the position. It should not noted that if the stock went up to $55 then it would cost $5,500 to replace the shares for a $500 loss. You would buy to open a long call when your analysis indicates the stock price will move up in a specific timeframe (expiration date). If the stock moves up by enough in the timeframe then the call option can be sold to close for a profit. You would sell a short call when your analysis is that the stock will drop in the timeframe (expiration date). Sell to open the call and it will profit if the stock drops by enough when it can be bought to close. Puts are the opposite. Buy to open a long put when the analysis is the stock will move down. Selling to open a put when the stock is expected to move up. A quick note about a key difference between buying and selling is that buying requires the stock to move up faster than the theta decay erodes the price, and by enough to compensate for the cost paid to open. Selling has an advantage in that we want the option price to erode, so theta decay can help these profit. Stated another way, a long (bought) option requires the stock to move in the correct direction by a good amount to profit, however, a short (sold) option can profit if the stock moves in the correct direction, doesn't move at all (due to theta decay), and many times even if the stock moves in the wrong direction. Because of this most experienced options traders sell options and few buy them. Note that r/options has a lot of links and a new trader thread where any questions can be asked. More on reddit.com

Started 4 months ago with 500 usd. Took me about10 weeks to go up to 14800 usd. Then Trump came and wiped out my entire portfolio with tariffs panic selling. You newer know what’s behind the corner with options… More on reddit.com