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Course Content
Options Fundamentals
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Call and Put Options Explained
Options Pricing and Greeks
Exercise and Assignment Process
Basic Options Strategies
In 2026, the most successful retail traders have moved away from "gambling" on high-leverage options and instead use Basic Options Strategies to create consistent cash flow and protect their existing portfolios.Here are the four essential strategies that form the foundation of a professional options toolkit.1. Covered Call (The Income Generator)This is the most popular strategy in 2026 for long-term investors. You sell a call option against shares you already own.Setup: Own 100 shares of a stock + Sell 1 Out-of-the-Money (OTM) Call.The Goal: To collect the Premium (cash) from the buyer while waiting for the stock to rise.The Outcome:Stock stays flat/down: You keep the shares and the cash.Stock hits the Strike: you sell your shares at a profit and keep the cash.Best For: Generating "synthetic dividends" on stocks you plan to hold anyway.2. Cash-Secured Put (The "Buy at a Discount" Strategy)Instead of buying a stock at the current market price, you get paid to wait for a better price.Setup: Have enough cash to buy 100 shares + Sell 1 OTM Put.The Goal: To get paid a premium to commit to buying a stock at a lower price (Strike Price).The Outcome:Stock stays above Strike: You keep the cash and try again next week.Stock drops below Strike: You are "assigned" the shares at the lower price you wanted, and your effective cost is even lower because of the premium you kept.3. Long Call & Long Put (The Directional Bets)These are the simplest forms of options trading, used to profit from a specific price move without owning the underlying asset.Long Call: You buy a call because you believe the price will go up significantly. It offers unlimited profit potential with limited risk (the premium paid).Long Put: You buy a put because you believe the price will go down. This is often used as "Insurance" to protect a portfolio during a market crash.4. Strategy Comparison TableStrategyMarket SentimentPrimary GoalRisk ProfileCovered CallNeutral to Slightly BullishIncome GenerationMedium (Stock can still fall)Cash-Secured PutNeutral to Slightly BullishBuy Stock CheaperMedium (Stock can still fall)Long CallAggressively BullishLeverage / ProfitLow (Only lose premium)Long PutAggressively BearishProfit / ProtectionLow (Only lose premium)5. The "Wheel" Strategy (The 2026 Professional Workflow)Many 2026 traders combine these into a cycle known as The Wheel:Sell Cash-Secured Puts until you are assigned shares.Once you own the shares, sell Covered Calls until the shares are called away.Repeat. This allows you to collect premiums at every stage of the market cycle.2026 Tactical Note: In today's high-volatility environment, professional traders typically look for 30–45 Days to Expiration (DTE). This provides the best balance between capturing Theta (Time Decay) and giving the trade enough time to work.💡 Student ExercisePick a "Blue Chip" stock (like Apple or Tesla). Look at the options chain for 30 days from now.How much cash would you receive today for selling a Covered Call 5% above the current price?If you did this every month, what would your "annual yield" be from premiums alone?
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Covered Calls and Cash-Secured Puts
Long Calls and Puts
Options vs Stock Trading
Advanced Strategy Combinations
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Spreads and Straddles
Iron Condors and Butterflies
Calendar and Diagonal Spreads
Risk Management and Psychology
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Position Sizing for Options
Managing Winners and Losers
Avoiding Common Options Mistakes
Course Overview: Options Trading Masterclass

In 2026, the Exercise and Assignment process is where the “paper” rights of an options contract turn into real-world asset transfers. Understanding this flow is vital because it dictates how you actually realize gains or manage obligations.

1. The Exercise Process (The Buyer’s Choice)

As an option buyer (holder), you are in control. You decide if and when to exercise your right.

  • American-Style Options: These can be exercised at any time before the expiration date. (Most stocks and ETFs).

  • European-Style Options: These can only be exercised at expiration. (Many index options like SPX).

The Step-by-Step Flow:

  1. Selection: You determine your option is “In-The-Money” (ITM) and you want the underlying shares.

  2. Instruction: You notify your broker (usually via a “Exercise” button in your 2026 trading app).

  3. Settlement: Your broker works with the OCC (Options Clearing Corporation) to deliver the shares.

    • For a Call: You pay the strike price and receive shares.

    • For a Put: You deliver shares and receive the strike price in cash.

2. The Assignment Process (The Seller’s Obligation)

As an option seller (writer), you are at the mercy of the buyer. You have no choice in the matter.

  • Random Selection: The OCC uses a random lottery to assign exercise notices to brokerage firms, who then randomly assign them to individual sellers.

  • The “Notice”: You will receive a notification (often overnight) that you have been “assigned.”

What happens during assignment?

  • If you sold a Call: You are forced to sell your shares at the strike price.

  • If you sold a Put: You are forced to buy shares at the strike price.

3. Automatic Exercise at Expiration

In 2026, almost all major brokerages follow the “Exercise by Exception” rule.

  • If an option is $0.01 or more In-The-Money at the closing bell on expiration Friday, it will be automatically exercised for the buyer and assigned to a seller.

  • The Risk: If you don’t have the cash to buy the shares (for a Call) or the shares to sell (for a Put), your broker may close your position early or issue a Margin Call.

4. Assignment Risk: The “Early” Factor

While most assignments happen at expiration, Early Assignment is a significant risk in 2026, especially during:

  • Dividend Dates: If you sold a Call and the stock is about to pay a dividend, the buyer might exercise early to capture that dividend.

  • High Volatility: If an option is deep ITM and has very little “Time Value” (Extrinsic Value) left, the buyer may exercise to lock in their gains.

5. Summary Table: Buyer vs. Seller

Feature Option Buyer (Holder) Option Seller (Writer)
Action Exercises Receives Assignment
Control Full Control No Control
Goal To buy/sell at a better price To keep the premium paid by the buyer
Obligation None Must fulfill the contract

💡 Pro Tip for 2026: Avoiding Assignment

If you are an option seller and do not want to be assigned (e.g., you don’t want to lose your favorite stock), you must “Roll” your position. This means buying back your current option to close it and selling a new one with a later expiration date.

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