What Are Stock Options?
An option is a contract that gives the buyer the right — but not the obligation — to buy or sell 100 shares of a stock at a specific price before a specific date. Used for income, hedging, leverage, and speculation.
Options can expire worthless. You can lose 100% of your premium quickly. Selling uncovered options exposes you to potentially unlimited losses. Vestovix is a research site, not investment advice — consult a licensed broker before trading options with real money.
The Basics
Common Strategies
Covered Call
IncomeYou own 100 shares and SELL one call against them. You collect premium up-front; if the stock stays below the strike, you keep the premium and the shares. Above strike, your shares get called away at that price.
Risk: Caps upside; you still bear all downside.
Cash-Secured Put
Income / EntryYou hold enough cash to buy 100 shares at a strike you're comfortable with, then SELL a put. You collect premium; if assigned, you buy the shares at your chosen entry price.
Risk: You must be willing to own the stock at the strike.
Long Call
Directional BullishBuy a call expecting the stock to rise. Maximum loss is the premium paid; maximum gain is theoretically unlimited.
Risk: Time decay works against you; can lose 100% of the premium if the stock stays flat or falls.
Long Put
Hedging / BearishBuy a put expecting the stock to fall, or to protect existing shares. Capped loss (the premium), profit grows as the stock drops.
Risk: Same time decay; needs meaningful price movement to overcome the premium cost.
Vertical Spread
Defined RiskBuy one option AND sell another at a different strike — same expiration. Caps both your max loss AND max gain, which makes the position cheaper than a naked long.
Risk: Less profit potential than buying outright; still expires worthless if the move doesn't happen.