Learn / Start Here
Anatomy of an Option
Strike, expiration, premium, and contract size name the contract. Moneyness says where the stock sits relative to the strike.
A listed equity option is one contract on 100 shares. The quote is per share, so dollars equal the quoted premium times 100.
The strike is the price in the contract. Expiration is the last day that contract lives. Premium is what the buyer pays and the seller collects.
The buyer pays the premium and holds the right. The seller collects the premium and takes the obligation. Buying to open starts a long. Selling to open starts a short.
Moneyness compares the stock with the strike. At the money means the strike is nearest the stock. A call is in the money when the stock is above the strike, and out of the money when the stock is below it. A put flips that: in the money when the stock is below the strike.
Teaching lab
Strike against the stock
Stock $100. One $100 call at $3. Slide the stock through the strike and watch the call move in and out of the money.
- P/L / share
- +0.04
- ×100
- +4
- Delta
- +0.535
- Gamma
- 0.0554
- Theta / day
- -0.0537
- Vega / vol pt
- +0.1139
P/L / share
vs the lesson entry
Delta
share-equivalent
Gamma
peaks near the strikes
Theta / day
clock
Vega / vol pt
fear priced in
Rho / rate pt
small at 30 days
One contract is 100 shares. The $3 quote is $300. Teaching numbers only.
Tickets for this structure
BTO (buy to open) · STO (sell to open) · BTC (buy to close) · STC (sell to close). Illustrative fills only. We never send these orders.
BTO (buy to open)
Open a long
Buy the contract
Stock $100. BTO (buy to open) 1× $100 call at $3. You pay $300 for the right to buy 100 shares at $100.
STO (sell to open)
Open a short
Sell the contract
STO (sell to open) that same $100 call at $3. You collect $300 and take the obligation.
Where the stock sits
Stock $100. The $100 call is at the money. The $90 call is in the money. The $110 call is out of the money.
The $100 put is at the money. The $110 put is in the money. The $90 put is out of the money.
How the Greeks move
A long at-the-money call has delta near one half. Slide the stock through the strike and delta rises as the call moves in the money. Time still eats the premium you paid.
Checking for a quiz…
Teaching numbers only — not a live quote, not a fill, not financial advice. All lessons · Back to Practice · Replay · Journal.