June 17, 2026 · 12 min read
Options are the most misunderstood tool in a retail investor's toolkit. Used well, they generate income, reduce cost basis, and hedge risk. Used poorly, they destroy portfolios. This guide explains the four core strategies — with real examples and no jargon.
The agreed price at which shares can be bought or sold. A $200 strike call on Apple gives the right to buy AAPL at $200, regardless of market price.
The date the option contract expires. Options can be weekly, monthly, or LEAPS (1–3 years). Time is the enemy of option buyers — sellers benefit from time passing.
The price you pay (or receive) for the option contract. One contract = 100 shares × premium per share. A $3 premium on one contract = $300.
A call is 'in the money' if the stock is above the strike; 'out of the money' if below. A put is ITM if the stock is below the strike. ITM options have intrinsic value; OTM options are all time value.
The rate at which an option loses value each day due to expiration approaching. Theta works against buyers — you need the stock to move before time erodes your option's value.
How much the option price moves for every $1 change in the stock. A call with delta 0.50 gains $0.50 in value per $1 stock increase. ATM options have ~0.50 delta.
Use BriMindInvest to identify high-quality stocks for covered call or cash-secured put strategies.