Options refresher: call, put, strike, 0DTE

An option is a contract that gives a right, not an obligation, on an underlying at a price set in advance. Everything else rests on four notions: the type, the strike, the expiry and the direction of the trade.

Call and put

• Call: the right to buy the underlying at the strike. It gains value when the market rises.
• Put: the right to sell the underlying at the strike. It gains value when the market falls.
• Premium: the price paid by the buyer to the seller. The buyer risks at most the premium; the seller collects the premium and carries the risk.