What You'll Learn
- 1What an option really is (no jargon)
- 2The difference between Call and Put
- 3How you can make money with options
- 4Why professionals use options every day
Key Takeaways
- ✓An option is a contract that gives you a choice – not an obligation
- ✓Call = you expect prices to rise
- ✓Put = you expect prices to fall
- ✓Your maximum risk is the price paid (premium)
- ✓You trade the promise, not the asset itself
Imagine this
You're 5 years old.
You love ice cream.
Your favorite flavor is chocolate.
Today, chocolate ice cream costs 1 euro.
But you're worried:
"What if tomorrow it costs 3 euros?!"
So the ice cream seller says:
"Give me 10 cents today, and I promise you can buy chocolate ice cream tomorrow for 1 euro, no matter the price."
You don't have to buy it tomorrow.
You just get the right to buy it.
That promise is called an OPTION.
What is an Option? (Kid version)
An option is:
- a promise
- that you can use later
- but you don't have to
You pay a small price now to lock in a deal for the future.
So an option is a contract that gives you a choice.
You pay a small amount today to get the right (but not the obligation) to buy or sell something later at a fixed price.
That's it. No stress. No magic.
Two Types of Options
Call-Option
"I want to buy later"
- →You think price will go up
- →You lock today's cheap price
- →If price goes up → you win
- →If not → you just lose the small fee
Use Call when you think the price will go up
Put-Option
"I want to sell later"
- →You're scared the price will go down
- →You lock a selling price
- →If price crashes → you're protected
- →If not → you only lose the small fee
Use Put when you think the price will go down
How Do You Make Money With Options? (Explained Like You're 5)
Let's go back to the ice cream example
You paid 10 cents for the promise to buy ice cream tomorrow for 1 euro.
What happens next?
Case 1: Price goes up
Tomorrow, ice cream costs 3 euros.
But YOU can still buy it for 1 euro.
Other kids say: "Wow! That deal is amazing!"
So you say: "Okay, you can have my deal… but pay me 2 euros for it."
Case 2: Price does NOT go up
Ice cream still costs 1 euro.
Your deal is not special anymore.
You don't use it.
You lose only the 10 cents you paid. That's it. No more loss.
The Big Secret (Even Adults Miss This)
You don't need to:
• buy the ice cream
• buy the stock
• own anything
You just trade the promise.
How Traders Make Money With Options (Kid Version)
People make money when:
- prices move up (Call option)
- prices move down (Put option)
- time works in their favor
- they choose the right moment
They:
- • buy options cheap
- • sell them more expensive
Just like trading toys.
Real Examples: Stocks & Crypto
Stock Example
Apple (AAPL) currently costs $150. You believe the price will rise to $180.
Call-Option: Strike $160, Premium $5
If AAPL rises to $180 → Option is worth $20
Profit: $15 (300% Return!)
Crypto Example
Bitcoin (BTC) costs $40,000. You're worried about a crash to $30,000.
Put-Option: Strike $38,000, Premium $500
If BTC falls to $30,000 → Option is worth $8,000
Protection: $7,500 Profit
Why Options Are Used in Trading
Limit risk
Protect investments
Trade with a clear plan
Control more with less capital
Make smart bets
Sleep better at night
Big investors, banks, and traders use options every day.
The Most Important Rule (Even for Adults)
Options are NOT magic.
You can lose the money you paid for the option.
But:
- Loss is limited
- Risk is known in advance
- No surprise margin calls (if used correctly)
This makes options different from many other instruments.
Options are tools, not gambling
Strategy matters more than luck
Education comes before profit
That's exactly why BeInOption exists.
One-Sentence Summary
An option means paying a little today to get a choice tomorrow.
Simple enough for a child. Powerful enough for professionals.
If a 5-year-old understands it, maybe finance isn't that scary after all.
Glossary
Frequently Asked Questions
Learn Options the Smart Way
At BeInOption, we explain options:
- • Step by step
- • Without hype
- • Without empty promises
Start with knowledge. Trade with confidence.
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Disclaimer
The information on this page is for educational purposes only and does not constitute investment advice. Options trading involves significant risks and is not suitable for all investors. You can lose more than your initial investment. Consult a qualified financial advisor before making trading decisions.
Sources & Further Reading
BeInOptions Team
Options made simple
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