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Calls vs. Puts

A call is the right to buy. A put is the right to sell. Long means you bought it. Short means you sold it.

A call is the right to buy 100 shares at the strike. A put is the right to sell 100 shares at the strike. One contract is 100 shares. Listed price is per share; dollars = price × 100.

Long means you BTO (buy to open): you paid the premium and you own the right. Short means you STO (sell to open): you collected the premium and you owe the other side. Closing a long is STC (sell to close). Closing a short is BTC (buy to close).

Same $105 call, $3 premium, stock $100. Long call: you paid $300. Break-even $108. At $120 you make about $1,200; below $105 you lose the $300. Short call: you collected $300. Below $105 you keep it. At $120 you lose about $1,200 — and more if the stock keeps running. Teaching numbers only.

The four-panel sketch is expiration. The lab lets you flip call/put and long/short, then slide stock and days so the Greeks move with the kink.

Long and short call and put payoffs at expirationFour expiration sketches. Long call rises after the strike. Short call falls after the strike. Long put rises as the stock falls. Short put falls as the stock falls. Longs lose at most the premium. Shorts keep the premium if the stock stays on their side of the strike.Long vs shortExpiration P/L · teaching sketchLong callBTOYou paid. Right to buy 100 at K.stockP/LKlose premiumstock upShort callSTOYou were paid. Must sell 100 at K if assigned.stockP/LKkeep premiumunlimitedLong putBTOYou paid. Right to sell 100 at K.stockP/LKstock downlose premiumShort putSTOYou were paid. Must buy 100 at K if assigned.stockP/LKcrash hurtskeep premium
K is the strike. The flat part is the premium. The diagonal is the right (or the sold right) in the money. Longs: max loss is what you paid. Shorts: you keep the credit unless the stock crosses K.

Teaching lab

Long vs short — then the Greeks

XYZ $105 call or $95 put at $3. Days at 0 is the expiration kink. Slide days up to see time value.

P/L / share
-3.00
×100
-300
Delta
0.000
Gamma
0.0000
Theta / day
0.0000
Vega / vol pt
0.0000

P/L / share

vs the lesson entry

32.000.00$60$80$100$120$140

Delta

share-equivalent

1.000.00$60$80$100$120$140

Gamma

peaks near the strikes

0.000000$60$80$100$120$140

Theta / day

clock

0.000000$60$80$100$120$140

Vega / vol pt

fear priced in

0.000000$60$80$100$120$140

Rho / rate pt

small at 0 days

0.000000$60$80$100$120$140

P/L first, then the five Greeks. Long: value − $3. Short: $3 − value. Teaching only.

Next: Anatomy of an Option

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 to open (go long)

XYZ $100. BTO (buy to open) 1× $105 call at $2.50 ($250). You are long. Max loss if you sit: $250.

STC (sell to close)

Close a long

Sell to close (exit a long)

Call later $7.00. STC (sell to close) at $7.00 ($700). P/L (profit and loss) = +$450. Flat.

STO (sell to open)

Open a short

Sell to open (go short)

STO (sell to open) that $105 call at $2.50. You are short. XYZ $112 at expiration can assign you to sell 100 at $105.

BTC (buy to close)

Close a short

Buy to close (exit a short)

BTC (buy to close) the short call at $7.00. P/L (profit and loss) = −$450. Assignment risk ends when the short is gone.

Puts, same four tickets

Long put: BTO (buy to open) a $95 put at $3 ($300). You want the stock down, or you are buying a floor under shares you already own. Break-even $92. At $60 the put is worth about $35 (+$3,200). At $100 it dies (−$300).

Short put: STO (sell to open) that same $95 put at $3. You keep $300 if the stock stays above $95. If assigned you buy 100 at $95; basis ≈ $92. A crash is still yours — this is not a debit spread.

The kink and the clock

Premium = intrinsic + time value. $110 stock, $100 call at $13 → $10 intrinsic and $3 time. Time goes to zero at expiration. BTO (buy to open) starts a long. STC (sell to close) ends it. STO (sell to open) starts a short. BTC (buy to close) ends it.

How the Greeks move

Long options: you pay theta, you own vega, gamma is yours. Short options flip those signs. Days at 0 is the expiration sketch. Slide days up and the corner rounds — that is time value. Rho stays small until you type toward a year.

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Teaching numbers only — not a live quote, not a fill, not financial advice. All lessons · Back to Practice · Replay · Journal.