understanding calls and putts

1. Get Started with Options
Understanding Calls & Puts
MAR
24
4:15 PM
EST
Tony Zhang, Chief Strategy Officer
Jessica Inskip, Director of Education & Product

2. Jessica Inskip
Director of Education & Product
Meet our newest team member!
Jessica Inskip is an advanced product specialist within
the self-directed investing space. Jessica is currently the
Director of Education and Product for OptionsPlay.
Jessica joined the financial industry in 2009 and most
recently accepted a position with OptionsPlay. She has
held various positions within the brokerage industry
across multiple firms, including roles specializing in
strategy, product management, high frequency trading,
complex options and derivative strategies, and the
relationship management of high-net-worth affluent
investors.
Ultimately, Jessica's passion is in creating education and
making it accessible to all

3. MASTER
Options Education
What to expect
ESSENTIAL
Options Education
Options Pricing
Understanding Calls & Puts
The Wheel Strategy
Exercise & Assignment
Understanding the Greeks
Implied Volatility | Earnings
Debit Spreads
Credit Spreads
SEASONED
Options Education
Calendars & Diagonals
Strangles & Straddles
Condor & Butterflies
The Greeks & Multi-legs
Hedging a Portfolio
The Other Greeks
Index Options
Build an essential foundation of
options concepts that will prepare
you for mastery
You will learn the ins and outs of
single-legged options
Level up with advanced concepts like
the Greeks and implied volatility to
confidently trade
You will learn the ins and outs of
two-legged option strategies
Become an options master and even
learn how the other Greeks work
You will learn the ins and outs of
four-legged option strategies

4. Types of securities, forms and research tools used in this video are for demonstration purposes only and
should not be considered a recommendation by OptionsPlay or a solicitation or an offer to buy or sell any
securities.
This video is not intended to be used for individual tax, legal or investment planning advice
Important
Disclaimer

5. Agenda
w
w
w
.
o
p
t
i
o
n
s
p
l
a
y.
c
o
m
Review of calls & puts basics
Long & short equity calls
Long & short equity puts
Putting it all together
Q&A
Review of an options chain

6. CALLS PUTS
Long Calls
Purchased for a premium
Own right to buy
Short Puts
Sold for a premium
Obligated to buy
Short Calls
Sold for a premium
Obligated to sell
Long Puts
Purchased for a premium
Own right to sell

7. Calls are
on the left

8. Puts are
on the
right

9. The strike price is in the middle

10. Expiration
dates
Expiration
dates

11. Last: Last
price traded
at

12. Change:
difference of
last and
previous
close

13. Bid: best
price
available to
sell

14. Ask: best
price
available to
buy

15. Volume:
amount of
contracts
traded today

16. Open Int:
amount of
contracts in
existence

18. OptionsPlay scans the
option chain for you
providing optimal
trade ideas

19. 1 expiring on April 22 at strike of $150
Buy to open AAPL CALL for $7
Owns the right to buy 100 shares of AAPL for $150/ per share at anytime up until April
22nd in exchange for a debit of $7 ($700 total)
$(800.00)
$(600.00)
$(400.00)
$(200.00)
$-
$200.00
$400.00
$600.00
$800.00
$1,000.00
$145.00 $150.00 $155.00 $160.00 $165.00
1
2
3
Strike Price
Unlimited gain
potential
$157
AAPL needs to move
more than the
extrinsic value
purchased
Gains begin
above $157
$150
Breakeven
Price @ Exp
1
Max loss occurs when stock is at
or below the strike at expiration
(premium paid)
STOCK @
$150 OR
LOWER
MAX RISK
2
When stock moves above strike
plus premium paid
STOCK @
$157
BREAKEVEN
3
Unlimited gain potential when
stock moves above breakeven
STOCK
ABOVE
$157
MAX GAIN
Long
Equity
Calls

20. $(1,000.00)
$(800.00)
$(600.00)
$(400.00)
$(200.00)
$-
$200.00
$400.00
$600.00
$800.00
$145.00 $150.00 $155.00 $160.00 $165.00
1 expiring on April 22 at strike of $150
Sell to open AAPL CALL for $7
Obligated to sell 100 shares of AAPL for $150/ per share at the buyer’s discretion at
anytime up until April 22nd in exchange for a credit of $7 ($700 total)
1
2
3
Strike Price
Limited gain
potential
$157
AAPL needs to
remain at strike
or move lower
$150
Breakeven
Price @ Exp
1
Max loss is unlimited, losses
begin when stock is above $157
STOCK
ABOVE
$157
MAX RISK
2
When stock moves above strike
plus premium paid
STOCK @
$157
BREAKEVEN
3
Limited gain potential when
stock remains at strike or moves
lower (premium received)
STOCK @
$150 OR
LOWER
MAX GAIN
Short
Equity
Calls
Unlimited
loss potential
Losses begin
above $157

21. 1 expiring on April 22 at strike of $150
AAPL CALL for $7
Equity
Calls
Expiration
Day
$140
$145
$150
$155
$160
$165
$170
$175
$180
$185
$150
Trade
Placed
$157
Breakeven
30 day timeframe to be
profitable
Strike
Price
LONG CALL PURCHASER SHORT CALL WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Call @ $7
Sell to open
1 AAPL $150 April 22 Call @ $7
Premium Received: + $7 ($700 total)
Bullish $165 price target
30 day timeframe
Neutral - Bearish $150 price target
30 day timeframe
Premium Paid: - $7 ($700 total)

22. 1 expiring on April 22 at strike of $150
AAPL CALL for $17
Equity
Calls
Expiration
Day
$140
$145
$150
$155
$160
$165
$170
$175
$180
$185
$150
Trade
Placed
$157
Breakeven
30 day timeframe to be
profitable
Strike
Price
LONG CALL PURCHASER SHORT CALL WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Call @ $7
Sell to open
1 AAPL $150 April 22 Call @ $7
Premium Received: + $7 ($700 total)
Bullish $165 price target
30 day timeframe
Neutral - Bearish $150 price target
30 day timeframe
Premium Paid: - $7 ($700 total)
Day 15
AAPL @ $165, Trade Placed
Sell to close
1 AAPL $150 April 22 Call @ $17
Premium Received: + $17
($1700 total)
GAIN of $10 per share
($1000 total)
Buy to close
1 AAPL $150 April 22 Call @ $17
Premium Paid: - $17
($1700 total)
LOSS of $10 per share
($1000 total)

23. 1 expiring on April 22 at strike of $150
AAPL CALL for $16
Equity
Calls
Expiration
Day
$140
$145
$150
$155
$160
$165
$170
$175
$180
$185
$150
Trade
Placed
$157
Breakeven
30 day timeframe to be
profitable
Strike
Price
LONG CALL PURCHASER SHORT CALL WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Call @ $7
Sell to open
1 AAPL $150 April 22 Call @ $7
Premium Received: + $7 ($700 total)
Bullish $165 price target
30 day timeframe
Neutral - Bearish $150 price target
30 day timeframe
Premium Paid: - $7 ($700 total)
AAPL @ $166, Trade Placed
Sell to close
1 AAPL $150 April 22 Call @ $16
Premium Received: + $16
($1600 total)
GAIN of $9 per share
($900 total)
Buy to close
1 AAPL $150 April 22 Call @ $16
Premium Paid: - $16
($1600 total)
LOSS of $9 per share
($900 total)

24. 1 expiring on April 22 at strike of $150
AAPL CALL for $5
Equity
Calls
Expiration
Day
$140
$145
$150
$155
$160
$165
$170
$175
$180
$185
$150
Trade
Placed
$157
Breakeven
30 day timeframe
to be profitable
Strike
Price
LONG CALL PURCHASER SHORT CALL WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Call @ $7
Sell to open
1 AAPL $150 April 22 Call @ $7
Premium Received: + $7 ($700 total)
Bullish $165 price target
30 day timeframe
Neutral - Bearish $150 price target
30 day timeframe
Premium Paid: - $7 ($700 total)
AAPL @ $150, Trade Placed
Sell to close
1 AAPL $150 April 22 Call @ $5
Premium Received: + $5
($500 total)
GAIN of $2 per share
($200 total)
Buy to close
1 AAPL $150 April 22 Call @ $5
Premium Paid: - $5
($500 total)
LOSS of $2 per share
($200 total)
Day 15

25. 1 expiring on April 22 at strike of $150
AAPL CALL for $0
Equity
Calls
Expiration
Day
$140
$145
$150
$155
$160
$165
$170
$175
$180
$185
$150
Trade
Placed
$157
Breakeven
30 day timeframe
to be profitable
Strike
Price
LONG CALL PURCHASER SHORT CALL WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Call @ $7
Sell to open
1 AAPL $150 April 22 Call @ $7
Premium Received: + $7 ($700 total)
Bullish $165 price target
30 day timeframe
Neutral - Bearish $150 price target
30 day timeframe
Premium Paid: - $7 ($700 total)
AAPL @ $145, Trade Placed
Cannot close option
Expires Worthless
GAIN of $7 per share
($700 total)
Cannot close option
Expires Worthless
LOSS of $7 per share
($700 total)

26. $(800.00)
$(600.00)
$(400.00)
$(200.00)
$-
$200.00
$400.00
$600.00
$800.00
$1,000.00
$135.00 $140.00 $145.00 $150.00 $155.00
1 expiring on April 22 at strike of $150
Buy to open AAPL PUT for $7
Owns the right to sell 100 shares of AAPL for $150/ per share at anytime up until April
22nd in exchange for a debit of $7 ($700 total)
2
3
Strike Price
Substantial
gain potential
$143
Gains begin
below $143
$150
Breakeven
Price @ Exp
1
Max loss occurs when stock is at
or above the strike at expiration
(premium paid)
STOCK @
$150 OR
HIGHER
MAX RISK
2
When stock moves below strike
minus premium paid
STOCK @
$143
BREAKEVEN
3
Substantial gain potential when
stock moves below breakeven
STOCK
BELOW
$143
MAX GAIN
Long
Equity
Puts
1
AAPL needs to move
more than extrinsic
value purchased

27. $(1,000.00)
$(800.00)
$(600.00)
$(400.00)
$(200.00)
$-
$200.00
$400.00
$600.00
$800.00
$135.00 $140.00 $145.00 $150.00 $155.00
1 expiring on April 22 at strike of $150
Sell to open AAPL PUT for $7
Obligated to purchase 100 shares of AAPL for $150/ per share at the buyer’s discretion at
anytime up until April 22nd in exchange for a credit of $7 ($700 total)
2
Strike Price
Substantial
loss potential
$143
Losses begin
below $143
$150
Breakeven
Price @ Exp
1
Loss begins when stock is at or
below the breakeven, max loss
occurs if the stock reaches $0
STOCK
BELOW
$143
MAX RISK
2
When stock moves below strike
minus premium paid
STOCK @
$143
BREAKEVEN
3
Limited gain potential when
stock moves above breakeven
(premium received)
STOCK @
$150 OR
HIGHER
MAX GAIN
Short
Equity
Puts
1
AAPL needs to
remain at strike
or move higher
3

28. 1 expiring on April 22 at strike of $150
AAPL PUT for $7
Equity
Puts
Expiration
Day
$125
$130
$135
$140
$145
$150
$155
$160
$165
$170
$150
Trade
Placed
$143
Breakeven
30 day timeframe to be
profitable
Strike
Price
LONG PUT PURCHASER SHORT PUT WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Put @ $7
Sell to open
1 AAPL $150 April 22 Put @ $7
Premium Received: + $7 ($700 total)
Bearish $135 price target
30 day timeframe
Neutral - Bullish $155 price target
30 day timeframe
Premium Paid: - $7 ($700 total)

29. 1 expiring on April 22 at strike of $150
AAPL PUT for $7
Equity
Puts
Expiration
Day
$125
$130
$135
$140
$145
$150
$155
$160
$165
$170
$150
Trade
Placed
$143
Breakeven
30 day timeframe to be
profitable
Strike
Price
LONG PUT PURCHASER SHORT PUT WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Put @ $7
Sell to open
1 AAPL $150 April 22 Put @ $7
Premium Received: + $7 ($700 total)
Bearish $135 price target
30 day timeframe
Neutral - Bullish $155 price target
30 day timeframe
Premium Paid: - $7 ($700 total)
AAPL @ $140, Trade Placed
Sell to close
1 AAPL $150 April 22 Call @ $11
GAIN of $4 per share
($400 total)
Buy to close
1 AAPL $150 April 22 Call @ $11
LOSS of $4 per share
($400 total)
Day 15 Premium Received: + $11
($1100 total)
Premium Paid: - $11
($1100 total)

30. 1 expiring on April 22 at strike of $150
AAPL PUT for $7
Equity
Puts
Expiration
Day
$125
$130
$135
$140
$145
$150
$155
$160
$165
$170
$150
Trade
Placed
$143
Breakeven
30 day timeframe to be
profitable
Strike
Price
LONG PUT PURCHASER SHORT PUT WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Put @ $7
Sell to open
1 AAPL $150 April 22 Put @ $7
Premium Received: + $7 ($700 total)
Bearish $135 price target
30 day timeframe
Neutral - Bullish $155 price target
30 day timeframe
Premium Paid: - $7 ($700 total)
AAPL @ $135, Trade Placed
Sell to close
1 AAPL $150 April 22 Call @ $15
GAIN of $8 per share
($800 total)
Buy to close
1 AAPL $150 April 22 Call @ $15
LOSS of $8 per share
($800 total)
Premium Received: + $15
($1100 total)
Premium Paid: - $15
($1100 total)

31. 1 expiring on April 22 at strike of $150
AAPL PUT for $9
Equity
Puts
Expiration
Day
$125
$130
$135
$140
$145
$150
$155
$160
$165
$170
$150
Trade
Placed
$143
Breakeven
30 day timeframe to be
profitable
Strike
Price
LONG PUT PURCHASER SHORT PUT WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Put @ $7
Sell to open
1 AAPL $150 April 22 Put @ $7
Premium Received: + $7 ($700 total)
Bearish $135 price target
30 day timeframe
Neutral - Bullish $155 price target
30 day timeframe
Premium Paid: - $7 ($700 total)
AAPL @ $143, Trade Placed
Sell to close
1 AAPL $150 April 22 Call @ $9
GAIN of $2 per share
($200 total)
Buy to close
1 AAPL $150 April 22 Call @ $9
LOSS of $2 per share
($200 total)
Day 15
Premium Received: + $9
($900 total)
Premium Paid: - $9
($900 total)

32. 1 expiring on April 22 at strike of $150
AAPL PUT for $7
Equity
Puts
Expiration
Day
$125
$130
$135
$140
$145
$150
$155
$160
$165
$170
$150
Trade
Placed
$143
Breakeven
30 day timeframe to be
profitable
Strike
Price
LONG PUT PURCHASER SHORT PUT WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Put @ $7
Sell to open
1 AAPL $150 April 22 Put @ $7
Premium Received: + $7 ($700 total)
Bearish $135 price target
30 day timeframe
Neutral - Bullish $155 price target
30 day timeframe
Premium Paid: - $7 ($700 total)
AAPL @ $143, Trade Placed
Sell to close
1 AAPL $150 April 22 Call @ $7
BREAKEVEN
Buy to close
1 AAPL $150 April 22 Call @ $7
Premium Received: + $7
($700 total)
Premium Paid: - $7
($700 total)
BREAKEVEN

33. 1 expiring on April 22 at strike of $150
AAPL PUT for $0
Equity
Puts
Expiration
Day
$125
$130
$135
$140
$145
$150
$155
$160
$165
$170
$150
Trade
Placed
$143
Breakeven
30 day timeframe to be
profitable
Strike
Price
LONG PUT PURCHASER SHORT PUT WRITER
AAPL @ $150, Trade Placed
Buy to open
1 AAPL $150 April 22 Put @ $7
Sell to open
1 AAPL $150 April 22 Put @ $7
Premium Received: + $7 ($700 total)
Bearish $135 price target
30 day timeframe
Neutral - Bullish $155 price target
30 day timeframe
Premium Paid: - $7 ($700 total)
AAPL @ $154, Trade Placed
Cannot close option
GAIN of $7 per share
($700 total)
Cannot close option
LOSS of $7 per share
($700 total)
Expires Worthless Expires Worthless

34. Sold for a premium
Obligated to buy underlying
Time decay is positive
Profits from neutral & upward movement
CALLS
Short Puts
Long Calls
PUTS
Option expires and keep maximum credit
GOAL
Purchased for a premium
Right to buy underlying
Time decay is negative
Profits from sharp upward movement
Long Calls
Stock rallies more than premium paid
GOAL
Long Calls
Purchased for a premium
Right to sell underlying
Time decay is negative
Profits from sharp downward movement
Long Puts
Stock declines more than premium paid
GOAL
Sold for a premium
Obligated to sell underlying
Time decay is positive
Profits from neutral & downward movement
Short Calls
Option expires and keep maximum credit
GOAL

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QUESTIONS

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