Stocks vs Options
Buying a share and buying an option on that share are not two flavours of the same thing. They are different instruments, with different rules about ownership, time, and how much you can win or lose.
A share is ownership. An option is a contract.
When you buy a share, you own a small piece of a company. There is no expiration date, you may receive dividends and votes, and you can hold it as long as you like. Your gain or loss tracks the stock almost exactly: if it rises 10%, so does your position.
An option is not ownership. It is a contract that grants the right — or, if you are the seller, the obligation — to buy or sell 100 shares at a set price (the strike) by a set date (expiration). It pays no dividend and carries no vote, it expires, and its value depends not only on the stock price but on how much time is left and how volatile the stock is.
The two differences that matter most
Leverage. One option contract controls 100 shares for a small fraction of what the shares would cost. That magnifies gains and losses alike. It is entirely normal for an option to lose 100% of its value while the underlying stock barely moves — something that almost never happens to the shares themselves.
Time. A share does not care how long you hold it. An option is on a clock: every day that passes, an option you bought is worth a little less, all else equal. Time is neutral for a shareholder and decisive for an option holder.
| Shares | Options | |
|---|---|---|
| What you hold | Ownership of the company | A contract on 100 shares |
| Expiration | None — hold forever | Yes — a fixed end date |
| Dividends / votes | Yes | No |
| Cost & leverage | Full price, 1:1 exposure | A fraction of the cost, amplified exposure |
| Main risk | The company falls | Time, the wrong move, or a move that is too slow |
Why bother with options at all
Because a contract can do things a share cannot: define your risk in advance, generate income by selling premium to someone else, hedge a position you already own, or take a leveraged view for a small outlay. This site focuses on one of those uses — selling options for income, specifically cash-secured puts — which is closer to acting like an insurer than to placing a bet.
Most of the ways people lose money quickly in markets involve options used as lottery tickets. The instrument is neutral; how you size and structure it is everything. None of this should be money you need.
The rest of these guides are about the contract side — what options are, how their price moves, and the structures you can build from them.
Educational only — not investment advice. Options involve a substantial risk of loss and are not suitable for every investor.