Options vocabulary

Options basics

A contract with a right and a deadline.

Finn, ChartQuest's turtle guide with an orange shell, jetpack, and gold compass

A stock option is a contract about a named stock, called the underlying stock. ChartQuest teaches chart-reading foundations, not options pricing or strategies.

Contract versus stock

Holding an option does not itself give ownership of the stock.

Separate cards show company ownership through stock and an option contract about the underlying stock.

Call & put rights

A holder has a right, not an obligation. Timing follows contract rules.

Call holder has right to buy the named stock; put holder right to sell. Strike means price set in the contract. Timing follows contract rules.

Deadline & premium

Expiration is the end date. An option can expire worthless.

Expiration is an end date; premium is the option price. A buyer can lose the entire premium.

Is the premium guaranteed to come back?

Show answer

No. The buyer can lose the entire premium. Exercise timing and settlement depend on the contract’s rules.

Try it with Finn

Made by ChartQuest · Hypothetical illustrations · Sources checked 2026-10-08: FINRA: Options · OIC: Options Basics