LEARN / MARKETS / 3 OF 3
Options: a right that runs out of time
An option's price depends on time, volatility and the contract terms, not just the underlying asset.
Read the contract first
A call gives its buyer the right to buy an underlying asset at a strike price by the contract's expiration, subject to its terms. A put gives a right to sell. The buyer pays a premium; sellers take on obligations. The SEC's options bulletin explains these terms and why expiration matters. Investor.gov ↗
The Greeks are model-based sensitivity measures. Delta describes a price response to the underlying; theta describes sensitivity to time passing; vega describes sensitivity to implied volatility. They are estimates, not guaranteed moves. Robinhood explains the measures on its options education pages. Robinhood ↗
Why a simple stock signal is not enough
A trading rule must select the underlying, call or put, strike, expiration and contract size. It also needs a realistic option bid and ask, fees and a plan for expiry or assignment. Robinhood offers options to approved retail accounts and documents partial fills when contract liquidity is low. Its published fee schedule shows that “commission free” does not mean every options trade is cost free. These are examples of product mechanics, not a claim about access to any broker’s trading API. Robinhood ↗ Robinhood ↗ Robinhood ↗
Sources
Examples marked made-up numbers are invented. Nothing in this lesson is a recorded CouchChange result or a recommendation.
Try it
Two calls reference the same stock but expire on different dates. Can one stock chart stand in for both contracts?
Think it through, then open an answer
No. Their time values, prices and risks can differ. You need each contract’s own quotes and terms.