Calls, puts, strikes, expiry — the 4 basics of options

An option is the right to buy or sell at a set price (strike) until a set date (expiry). A call is the right to buy; a put is the right to sell.

An option is “the right to buy or sell at a set price, until a set date.” Unlike a stock, you trade a right, not the asset itself. Learn four things and you are halfway there — call, put, strike, expiry.

Before reading on, walk through what happens when you buy one call — it takes 30 seconds.

Call vs Put

• ·Call = the right to buy. Buy a call if you expect the underlying to rise.
• ·Put = the right to sell. Buy a put if you expect it to fall.
• ·Buying a right costs a premium. Selling a right collects a premium but takes on an obligation.

Strike

The strike is the agreed price when the right is exercised. A 5,500 call is “the right to buy the underlying at 5,500.” If the spot is 5,600 it is 100 in the money (ITM); at 5,400 its value is mostly time value (OTM).

Expiry

Expiry is the day the right disappears. The closer to expiry, the faster time value decays (theta). An option expiring the same day is called 0DTE (zero days to expiry).

In NOSKA

NOSKA backtests hundreds of combinations — which strike (delta), which expiry (DTE), which entry time worked in the past — and finds the combination that fits you.