Options Trading Explained: Calls, Puts & Strategies | Prodigy

by Prodigy Team November 01, 2025

Options Trading Explained: Calls, Puts, Strategies, and How It Differs from Stocks

Options trading can be one of the most powerful ways to grow an account—when you understand how it works. Unlike buying and selling shares directly, options give you the right, not the obligation to buy or sell a stock at a set price within a specific time frame. In this guide, you’ll learn what options are, how they differ from stock trading, key terms, popular strategies, and how the Prodigy Trading Team can help you learn faster with real examples and mentorship.

Options vs. Stocks — What’s the Difference?

Stocks: You buy or sell shares at the current market price. Profit (or loss) is based on how far price moves after your entry.
Options: You trade contracts tied to a stock. Each contract typically represents 100 shares and can profit from moves up or down, depending on whether you use a call or a put.

Bottom line: Stock trading builds ownership. Options trading builds opportunity with leverage, flexibility, and defined risk—when used correctly.

What Is an Option?

An option is a contract tied to a stock. There are two types:

Call Option: Right to buy the stock at a set price (bullish).
Put Option: Right to sell the stock at a set price (bearish).

Calls generally increase in value when the stock goes up. Puts generally increase in value when the stock goes down.

Key Options Terms (Fast Glossary)

Strike Price: The preset price in your contract.
Premium: The price you pay (or receive) for the option.
Expiration: When the contract ends.
In the Money (ITM) / Out of the Money (OTM): Whether the option has intrinsic value now.
Volume / Open Interest: Liquidity and activity for a contract (higher is better for fills).
Implied Volatility (IV): Market’s expectation of future movement; affects premium price.
Greeks: Delta, Theta, Vega, Gamma—risk metrics that explain how options behave.

Why Trade Options? (Pros)

Leverage: Control 100 shares with a fraction of the cost.
Flexibility: Profit in up, down, or sideways markets.
Defined Risk: Buying options caps risk at the premium paid.
Hedging: Protect a stock portfolio using puts or spreads.

Popular Options Strategies

Buying Calls: Bullish directional bets.
Buying Puts: Bearish directional bets.
Debit Spreads: Lower-cost, defined-risk variants of calls/puts.
Covered Calls: Generate premium against shares you own.
Iron Condors / Straddles: Advanced, volatility-focused strategies.

How Prodigy Helps You Learn Options Faster

At Prodigy Trading Team, we’ve brought together many of the best options traders—each with specialized styles and proven results. You’ll learn how experienced analysts time entries, manage risk, and apply strategies across market conditions.

Real-time educational breakdowns of directional and spread trades.
Structure, momentum, and volume logic—so you learn why a setup works.
Actionable ideas that show how to think like an options trader, not just follow alerts.

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Disclaimer: Prodigy Trading Team provides education and market commentary only. Nothing here is financial advice. Always perform your own due diligence and trade at your own risk.