Calls and puts

There are exactly two kinds of option contract. Once you know what each one does, every alert you will ever read is decipherable.

A call is the right to buy

A call gives you the right to buy the stock at a set price. You want the stock to go up. If you hold the right to buy NVDA at 215 and NVDA runs to 240, your right to buy 25 dollars below the market is worth real money, and the contract price reflects that.

A put is the right to sell

A put gives you the right to sell the stock at a set price. You want the stock to go down. If you hold the right to sell SPY at 750 and SPY drops to 730, your right to sell 20 dollars above the market is what has value. Puts are how you trade a decline without shorting anything.

You do not need to own the stock

A common assumption is that a put requires you to already hold shares, or that a call means you will end up buying 100 shares at some point. Neither is true for how these are usually traded. Contracts trade on an open market like anything else, and the normal way out of a winning trade is to sell the contract to someone else at a higher price than you paid. You almost never exercise it.

That is exactly what our alerts show. An entry is a contract bought, and an exit is that same contract sold, often in pieces as the trade works.

Reading a contract line

Which one do you want

That last row matters more than it looks. As a buyer, sideways is not neutral for you. Time passing costs you money even when the stock does nothing, which is the subject of the premium lesson.