A beginner's guide

Basic OptionsTrading

"I won't give you a tree. I'll show you how to grow a forest."

@stayhometrading
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The Roadmap

What you'll learn

This course builds from the ground up. Start with the language of options, then learn how to read a contract, judge probability, and pick the right strategy for your view on price.

Lesson 01

What is an option?

An option is a derivative — its value comes from another asset. Options can be based on stocks, commodities, FX, bonds, energy and more. You use them when you have a view on where the price is heading.

A view on price

Every options trade starts with an opinion about direction:

  • Up — you think the asset rises
  • Down — you think it falls
  • Sideways — you think it stays put

Rights & obligations

Options are fundamentally about rights and obligations:

  • Option buyers have rights under certain scenarios.
  • Option sellers have obligations under those same scenarios.

The four building blocks

There are countless strategies, but only four core building blocks. Everything else — bull put spreads, iron condors, strangles, straddles — is just a combination of these.

Bullish

Buy Call

Pay a premium for the right to buy at a set price. Profits if the price rises.

Bearish

Buy Put

Pay a premium for the right to sell at a set price. Profits if the price falls.

Bearish

Sell Call

Collect a premium, taking the obligation to sell if assigned. Profits if price stays flat / falls.

Bullish

Sell Put

Collect a premium, taking the obligation to buy if assigned. Profits if price stays flat / rises.

Lesson 02

Anatomy of a contract

A contract is usually written as a single line. Tap each part below to decode it.

MSFT DEC 19 '25 460 Call

MSFT — the underlying

The stock code (ticker) of the underlying asset. Here it's Microsoft. This is the company whose price your option tracks.

Lesson 03

Reading the option chain

When you open an option chain, you're hit with a wall of numbers. So many prices are listed — how do you read them? Each row is a strike price; each column tells you something about that contract.

Nvidia call option chain showing Bid, Ask, Last, Open Interest, Strike and Delta columns
Real call chain — as seen on @stayhometrading
From the stories

What you're actually looking at

Here's a real call chain for Nvidia. Each row is a strike (179, 180, 181…), and across the row you get the Bid, Ask, Last traded price, Open Interest and Delta. Once you know what each column means, the "wall of numbers" becomes a menu of choices.

The key columns

  • Strike — the agreed price you can buy/sell at
  • Bid / Ask — what buyers offer / sellers want for the premium
  • Last — the price the last contract traded at
  • Delta — sensitivity to price & a proxy for probability (next lesson)

Premium = cost of opportunity

The further in-the-money a contract sits, the higher the chance of success — and the more expensive the premium.

As a buyer, a higher probability of success costs you more. As a seller, the lower the buyer's probability of success, the lower the premium you earn from them.

Lesson 04

Delta = probability of finishing ITM

Beyond measuring how much an option's price moves with the stock, Delta can be read as the rough probability of the option being in-the-money at expiry — always from the buyer's perspective.

Read it as probability

The same Nvidia chain, decoded

Taking the Delta column at face value, in roughly one month's time there is about:

  • 64.3% probability of finishing in-the-money at the 179 strike (Delta 0.643)
  • 59.6% probability at the 180 strike (Delta 0.596)
  • 52.3% probability at the 184 strike (Delta 0.523)

Lower strikes sit deeper in-the-money, so they carry a higher probability — and a higher premium.

Nvidia option chain with the Delta column read as probability of finishing in-the-money
Delta as probability — @stayhometrading

An example

Say a call has a Delta of 0.64. That implies there's roughly a 64% probability the option finishes in-the-money in about a month if you buy it at that strike.

The seller, taking the other side, is effectively betting on the remaining ~36% — and gets paid a premium upfront for taking that risk.

0.64 ≈ 64% implied chance of finishing in-the-money
Lesson 05

In-the-money vs out-of-the-money

"Moneyness" is always measured from the buyer's perspective. If an option is in-the-money (ITM), it's in a favourable position that benefits the buyer. Pick a strategy to see what ITM means for each side.

Microsoft in-the-money buy call example with a market price of 472.12
An ITM buy call — @stayhometrading
Example · a buy call

"In-the-money" with real numbers

Microsoft is trading at $472.12. Say you hold a call with a $450 strike and you think the price climbs toward $500. You have the right to buy at $450 while the market sits well above it — that option is in-the-money, and you pocket the difference. The deeper ITM it goes, the more it works in the buyer's favour.

In-the-money

Market price at expiry is above the strike. The buyer wants this — they can buy below market.

Out-of-the-money

Market price at expiry is below the strike. The seller wants this — the option expires worthless and they keep the premium.

The mirror rule: As a buyer, you want the option to be ITM at expiry. As a seller, you want it to be OTM — so it expires worthless and you keep the premium you collected.

Lesson 06

Buy vs sell — the four trades in full

Each building block maps to a market view. Buy call & sell put are bullish; sell call & buy put are bearish.

Buy Call

You're bullish — you think the price will go up in the next X days. You buy the right to buy the stock at a lower price, expecting it to climb so you capture the increase.

Sell Call

You're bearish — you think the price will fall. You sell someone the right to buy the stock from you at a (usually) higher-than-market price, betting it stays below that level, and you earn a premium upfront.

Sell Put

You're bullish. You sell someone the right to sell you shares at a pre-specified price. If the stock stays up, it expires worthless and you keep the premium. Why not buy outright? If the price isn't at the level you want yet, get paid while you wait.

Buy Put

You're bearish. You pay a premium for the right to sell at a set price, profiting if the stock falls below your strike.

How bull & bear map to options

A stock is bullish when indicators point to rising prices, and bearish when they point to falling prices. Match the strategy to the direction — but always ask: how far will it move, and what strike makes sense?

Worked Example

A Nvidia call, start to finish

Let's walk one real setup straight from the @stayhometrading stories: you're bullish on Nvidia and thinking about buying a call. We'll see both the buyer's and the seller's side — including what happens when the trade goes against you.

Explanation of why an option seller takes the other side of a Nvidia call
Buyer vs seller — @stayhometrading
Step 1 · Two sides of the trade

Why would the seller take the other side?

Nvidia trades around $183. You buy the right to buy it at the $179 strike — below market. Isn't the seller losing money selling cheaper? Not really:

  • You pay the seller a premium (~$940–$950) upfront — the entry fee to capitalise on a potential gain, compensating them for the risk.
  • You think the price goes up; the seller thinks it goes down (or stays below $179). They're simply taking the opposite view.
Step 2 · When you're wrong

If Nvidia drops to $170 instead

A month later, suppose Nvidia has fallen to $170:

  • As the buyer: you still have the right to buy at $179 — but why would you? You can buy in the market at $170. You let it expire. Your loss is capped at the ~$950 premium you paid.
  • As the seller: the buyer won't exercise (they won't pay you more than the market), so the option expires worthless. Your gain is the ~$950 premium you collected.

That's the whole trade-off in one picture: the buyer pays a premium for upside with a known, limited downside; the seller earns that premium for taking on the obligation.

What happens to buyer and seller if Nvidia drops to 170
The downside case — @stayhometrading
Lesson 07

Choosing what to trade

The strategy is only half the trade — the underlying matters just as much.

Selling puts

Because selling a put is a bullish strategy, only choose stocks that are currently bullish in nature and look set to continue rising — unless you genuinely don't mind holding the shares for a long time (which may not be the most efficient use of capital).

Match view to direction

  • Expecting it to rise? Lean bullish: buy call or sell put.
  • Expecting it to fall? Lean bearish: buy put or sell call.
  • Always confirm the trend with your own technical analysis before committing.
In Practice

How @stayhometrading actually trades

The lessons above are the theory. These are the habits she shares on the @stayhometrading reels — kept deliberately simple, because the goal is consistent income, not excitement.

Just two strategies

"I only use 2 strategies. Everything else is just noise." Those two are the wheel — selling puts to generate consistent income from stocks you'd be happy to own anyway — and credit spreads. Boring pays.

A 5-minute daily process

A short check, repeated every single day:

  • Start from an existing watchlist
  • Run a screening script
  • Check the charts
  • Execute

TP / SL / GTC on every trade

Three orders she sets up the moment a trade is on:

  • TP — take profit
  • SL — stop loss
  • GTC — good-till-cancel, so they stay live until they fill

"Unless you're staring at the charts without blinking and sleeping, it's always a good idea to set these for every trade." GTC is what locks in profits and stops losses before they get too big — because unrealised profits are no profits.

Indicators are your map

"Markets are people. People are habits. Indicators are the map." She reads them like traffic lights — go, get ready to stop, or no-go — using just a couple of tools in TradingView. Indicators don't predict; they tell you whether conditions are a green light.

The "reclaim" review

After a trade, go back and be honest with yourself: Why did you enter? Why at that price? Why didn't you close at this profit? Why didn't you act when the chart did something? Why didn't you take profit or stop the loss at that level? Reviewing your own decisions is how the next entry gets better.

Start on paper first

If you're unsure about options, don't risk real money yet. Brokers like Interactive Brokers offer a paper-trading account — practise the whole process with fake money until the routine feels natural, then go live.

Watch & Learn

Set up your charts — the reel walkthroughs

She records the actual setup, step by step, on @stayhometrading. These are the reels that matter most for getting your own charts ready — watch them in order. (They open on Instagram in a new tab.)

Indicators & TradingView setup
01

Why use indicators at all?

Indicators work like a traffic system — before crossing the road you don't check just one thing. The case for reading several signals together instead of guessing.

Watch on Instagram ↗
02

Indicators are your traffic lights

A walkthrough of the indicators she actually uses in TradingView, and how to read them as go / get-ready-to-stop / no-go.

Watch on Instagram ↗
03

Configure RSI in TradingView

"Options trading is about balance. RSI helps us assess if the stock price is in balance." Step-by-step RSI setup.

Watch on Instagram ↗
04

Configure DMI & ADX in TradingView

A quick, easy way to spot the quality and strength of the prevailing trend. Step-by-step DMI / ADX setup.

Watch on Instagram ↗
05

Configure Moving Averages in TradingView

Setting up moving averages. "Indicators are personal to everyone's trading styles — learn the basics, then adjust on your own."

Watch on Instagram ↗
06

Now you're ready to read the charts

With the indicators configured, this ties it together — how to use them to judge when to enter or exit the market.

Watch on Instagram ↗
More walkthroughs

Know your execution screen

"The options execution screen will be the screen you use the most." A tour of where you actually place trades.

Watch on Instagram ↗

Is the trade worth it? Compute it

"Your capital is limited — learn how to compute if a trade is worth it" before you tie up money in it.

Watch on Instagram ↗

Manage your trades — don't abandon them

"Trades are like plants. Don't just leave them alone to manage on their own." Includes rolling a sell call for 4–5% across two months.

Watch on Instagram ↗

Assignments aren't always bad

"Stock assignments are not always bad — they can be good income in sideways markets." Reframing what feels like a loss.

Watch on Instagram ↗
Quick Reference

Glossary

Option
A derivative contract whose value is based on an underlying asset.
Call
A contract relating to the right to buy the underlying at the strike price.
Put
A contract relating to the right to sell the underlying at the strike price.
Strike price
The agreed price at which the underlying can be bought or sold.
Premium
The price paid by the buyer to the seller for the contract.
Expiry
The date the contract ends and is settled.
Delta
Sensitivity of the option price to the underlying; also a rough probability of finishing ITM (from the buyer's view).
ITM (In-the-money)
The option is in a favourable position for the buyer.
OTM (Out-of-the-money)
The option is not favourable for the buyer; sellers want options to expire OTM.
Assignment
When a seller is obligated to fulfil the contract (buy or sell the shares).
Bullish
Expecting the price to rise. (Buy call / sell put.)
Bearish
Expecting the price to fall. (Buy put / sell call.)