Options for beginners, in practice

What an ASX option contract is, covered calls, protective puts and spreads with worked numbers, and why selling options and short-dated contracts drain beginners.

Module 12 of 26, in the stage "How markets work". 6 lessons.

Lessons

1. What an ASX option contract isName the parts of an option contract: underlying, call or put, strike, expiry, premium, contract size and exercise style. 16 min.
2. Covered calls: income with a capWork out the payoff of owning shares and selling a call against them. 16 min.
3. Protective puts: insurance a gap cannot skipCompare a stop loss and a bought put through an overnight gap. 16 min.
4. Spreads: capping both risk and rewardBuild a bull call spread and work out its maximum loss, maximum gain and breakeven. 16 min.
5. Selling options: a high win rate that hides big lossesShow why frequent small wins can come with rare large losses. 16 min.
6. Expiry, assignment and the short-dated trapKnow what happens at and before expiry, and why short-dated options drain beginners. 14 min.

Concepts covered

• Stop loss
• Risk-reward ratio
• Win rate

Keep going

• Previous module: Options: how they pay and what moves them
• Next module: How much to risk, and surviving losing streaks
• All 26 modules and 157 lessons
• Open the first lesson in the course

General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.