ALGO Swamp

Beginner

Options 101: Options trading for beginners

Wait. Then Bite.

Options look complicated. They don't have to be.

Options 101 is a beginner options trading course in eight short modules. You'll learn how options work, with calls and puts explained in plain language, then strikes and expirations, intrinsic and extrinsic value, the Greeks, reading a thinkorswim option chain, and sizing from max loss. Each module has a plain-language lesson, a worked example with simple numbers, a thinkorswim tip, and a 5-question quiz. At the end there's a 15-question final exam. Score 80% (12 of 15) to pass.

Go in order. Each module builds on the one before it. Take your time with the examples. Do the math yourself.

Our motto is simple: Wait. Then Bite. Learn the rules first. Practice on paper. Act only when you understand what you're holding.

This is educational content, not financial advice.

$39once·included with an active desk

Start Modules 1–2 freeBuy Options 101 · $39

What you'll learn

  • What an option is
  • Calls and puts
  • Strike price, expiration, and premium
  • Intrinsic vs. extrinsic value
  • The risk of buying vs. selling options
  • The Greeks: delta, theta, vega, and gamma
  • Reading an option chain in thinkorswim
  • Position sizing from max loss

Course outline: 8 modules

  1. Module 1 · FreeWhat an Option IsDefine an option as a contract with a right, not an obligation, for the buyer · Explain that one standard equity option contract covers 100 shares · Describe the roles of the buyer (holder) and the seller (writer)
  2. Module 2 · FreeCalls and PutsExplain what a call and a put give the buyer · Identify which way the underlying must move to help a long call or a long put · Calculate the break-even price at expiration for a long call and a long put
  3. Module 3Strike, Expiration and PremiumDefine strike price, expiration date and premium · Classify an option as in the money (ITM), at the money (ATM) or out of the money (OTM) · Explain how strike choice and time to expiration affect premium
  4. Module 4Intrinsic and Extrinsic ValueCalculate intrinsic value for calls and puts · Calculate extrinsic (time) value from the option price · Explain why extrinsic value goes to zero at expiration
  5. Module 5Buying vs. Selling and the Risk of EachCompare the maximum loss and maximum gain of long and short options · Explain why a short (naked) call has theoretically unlimited risk · Calculate the maximum loss of a defined-risk vertical credit spread
  6. Module 6The Greeks at a Basic LevelDefine delta, theta, vega and gamma in plain language · State the typical delta ranges for calls (0 to 1) and puts (0 to -1) · Estimate a per-contract dollar change using a Greek and the 100 multiplier
  7. Module 7Reading an Option Chain in thinkorswimNavigate to an option chain in thinkorswim (Trade tab > All Products) · Read bid, ask, mark, volume, open interest, delta and Probability OTM · Judge liquidity using the bid-ask spread and open interest
  8. Module 8Basic Risk and Position SizingSize a position from a chosen maximum risk per trade · Explain why defined max loss, not premium collected, drives sizing · List key non-price risks: assignment, liquidity, events and margin
  9. Final exam · 12 of 15 to passFinal exam

Finished Options 101? Next: Options 201: Vertical Spreads

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Options 101 FAQ

Is Options 101 free?

Modules 1 and 2 (What Is an Option? and Calls and Puts Explained) are free. The full course, with all eight modules, the quizzes, the final exam and the certificate, is $39 once, or included with an active ALGO Swamp desk plan, including the 7-day trial.

Who is Options 101 for?

Beginners. You don't need any options experience. Each module builds on the one before it, starting with what an option is and how options work.

What is the difference between a call and a put?

A call gives the buyer the right to buy 100 shares at the strike price. A put gives the buyer the right to sell 100 shares at the strike price. Call buyers generally benefit when the stock goes up; put buyers generally benefit when it goes down.

How does the final exam work?

The final exam has 15 questions. Score 80% (12 of 15) to pass and print a certificate of completion with your name and the date.

Do I need thinkorswim?

No. Each module includes a thinkorswim tip, and Module 7 walks through the thinkorswim option chain. Practice in paperMoney before you trade real money.

Is Options 101 financial advice?

No. Options 101 is educational content, not a recommendation to buy or sell any security or to use any strategy. Options trading carries substantial risk and is not suitable for everyone.

What comes after Options 101?

Options 201: Vertical Spreads. It shows you how to combine a long and a short option into bull call, bear put, bull put, and bear call spreads, with defined max loss and break-even.