Your First Options Trade

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⚠️ Important Warning

• ✅ Understand stocks and how they work
• ✅ Have traded stocks for at least 3-6 months
• ✅ Understand you can lose 100% of investment
• ✅ Only risk money you can afford to lose completely
• ✅ Have completed options approval with your broker

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What You’ll Learn

• How to select an options trade setup
• How to evaluate strike price and expiration
• How to place your first options order
• How to manage risk and exits

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Options Trading Basics

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What Are Options?

• Call Option: Right to BUY stock at strike price
  • You profit if stock goes UP
  • Bullish play
• Put Option: Right to SELL stock at strike price
  • You profit if stock goes DOWN
  • Bearish play

• Strike Price: The price you can buy/sell at
• Expiration Date: When the option expires (worthless if not profitable)
• Premium: What you pay for the contract
• Contract: Controls 100 shares of stock

AAPL $180 Call expiring 12/20
- You pay $5.00 per share ($500 per contract)
- Right to buy 100 shares of AAPL at $180
- Expires December 20th
- Profitable if AAPL > $185 by expiration
- Max loss: $500 (100%)

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Why Trade Options?

• ✅ Leverage: Control $10,000 of stock for$500
• ✅ Defined risk: Max loss = premium paid
• ✅ Flexibility: Profit from up, down, or sideways
• ✅ Lower capital required than stocks

• ❌ Time decay: Lose value every day
• ❌ Can lose 100% if wrong
• ❌ More complex than stocks
• ❌ Less liquid (harder to exit)

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Before You Start

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Prerequisites

• 3+ months stock trading experience
• Completed options education course
• Understand calls vs puts
• Know how expiration and strike work

• Options trading approved by broker
• Minimum $2,000 account balance (recommended)
• Paper trading account for practice

• Only risk 1-2% of account per trade
• Have stop-loss plan
• Know max loss before entering

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Test Your Knowledge

1. What happens to my call if stock goes down?
2. What’s time decay and how does it affect options?
3. What’s the difference between ITM, ATM, and OTM?
4. How do I calculate my max profit and max loss?

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Step 1: Select Your Stock

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Choose a Stock You Know

• Liquid, high-volume stocks (AAPL, TSLA, SPY, QQQ)
• Stocks you already own or follow
• Clear trend or catalyst
• Active options market

• Penny stocks
• Low-volume stocks
• Stocks with no clear direction
• Highly volatile meme stocks

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Open the Ticker

1. Go to Chat tab
2. Switch to Maverick companion (best for options/momentum)
3. Mention your stock: “I want to trade options on $AAPL”

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Step 2: Select Options Trade Quick Prompt

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Using the Quick Prompt

1. Look for quick prompt suggestions
2. Tap “Options Strategy Suggestion” or “Swing Options Setup”
   • OR -
3. Type: “Options trade setup for [TICKER], timeframe 2-3 weeks”

Options trade setup for AAPL
Timeframe: 1-2 weeks
Bullish bias

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What Maverick Analyzes

• Directional bias: Bullish, bearish, or neutral
• Technical setup: Key levels, momentum, volume
• Catalyst check: Earnings, news, events
• Strike recommendations: Which strikes to target
• Expiration guidance: How far out to go
• Risk/reward: Potential profit vs loss

$AAPL Options Setup - Bullish Momentum Play

Technical Picture:
━━━━━━━━━━━━━━━━━━━━
- Price: $175.50
- Trend: Uptrend, above 20/50 SMAs
- Volume: Elevated, buyers active
- RSI: 62 (room to run)
- Key resistance: $180
- Support: $172

Catalyst:
- Strong iPhone sales data
- Positive analyst upgrades
- Tech sector momentum

Setup:
Call option targeting $180-182 breakout
Timeframe: 1-2 weeks
Entry: Now or on dip to $174

Recommended Strike: $180 Call
Expiration: December 20 (22 DTE)
Premium: ~$4.50 ($450/contract)

Breakeven: $184.50
Target: $188-190 (2-3x return)
Stop: Close if AAPL < $172

Risk/Reward: $450 risk for $900-1,350 profit
Win rate: ~55% (favorable)

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Step 3: Choose Strike Price and Expiration

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Understanding Strike Selection

• Strike below current price (calls)
• More expensive, less leverage
• Higher delta, moves more with stock
• Good for: Lower risk, beginners

• Strike near current price
• Balanced cost and leverage
• Medium delta (~0.50)
• Good for: Most situations, first trade

• Strike above current price (calls)
• Cheaper, more leverage
• Lower delta, needs big move
• Good for: Experienced, high conviction

AAPL at $175.50:

ITM: $170 Call = $8.00 ($800) - Safer
ATM: $175 Call = $5.50 ($550) - Balanced ✓
OTM: $180 Call = $3.50 ($350) - Riskier
OTM: $185 Call = $2.00 ($200) - Very risky

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Choosing Expiration

• Cheapest
• Highest risk (time decay)
• Need to be RIGHT and FAST
• For: Experienced day traders only

• Good balance
• Enough time for setup to work
• Not too expensive
• For: Active swing traders ✓

• More expensive
• Time to be patient
• Lower time decay stress
• For: Position traders, beginners ✓

• Most expensive
• Lowest time decay
• More like stock substitute
• For: Long-term bullish

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Step 4: Review the Trade Setup Card

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Maverick Shows Trade Details

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AAPL - Call Option
━━━━━━━━━━━━━━━━━━━━━━━━━━

Stock Price: $175.50

Strike: $175
Type: Call
Expiry: 2025-12-20 (22 DTE)
Premium: $5.50 per share
Contract Cost: $550 (100 shares)

Breakeven: $180.50
Max Profit: Unlimited (theoretically)
Max Loss: $550 (100%)

Greeks:
- Delta: 0.52 (moves $0.52 per $1 stock move)
- Theta: -0.15 (loses $15/day time decay)
- IV: 28% (moderate volatility)

Bid: $5.45 | Ask: $5.55
Volume: 2,450 contracts
Open Interest: 8,200

━━━━━━━━━━━━━━━━━━━━━━━━━━
Execute Trade
━━━━━━━━━━━━━━━━━━━━━━━━━━

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Key Things to Check

• Volume > 100 contracts/day
• Open Interest > 500
• Bid-Ask spread < $0.20

• Premium < 2% of total account
• Example: $30k account = max$600/trade

• Delta 0.40-0.60 for balanced
• Theta not too high (< -0.20)
• IV not extremely high (< 50%)

• Stock can realistically reach
• 5-10% move from current price
• Above key resistance

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Step 5: Execute the Trade

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Order Entry

• ❌ NOT recommended for options
• Wide bid-ask spreads
• Instant execution
• Pay more than needed

• ✅ RECOMMENDED
• Set max price you’ll pay
• Better fill price
• Might not fill immediately

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Setting Your Limit Price

1. Check current Bid: $5.45 / Ask: $5.55
2. Start with mid-price: $5.50
3. If not filling, increase by $0.05
4. Max: Ask price ($5.55)

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Place the Order

1. Tap “Execute trade” on setup card
2. Verify:
   • ✅ Correct ticker (AAPL)
   • ✅ Correct strike ($175)
   • ✅ Correct expiration (12/20)
   • ✅ CALL (not put!)
   • ✅ BUY TO OPEN (not sell!)
   • ✅ Quantity: 1 contract
   • ✅ Limit price: $5.50
3. Review total cost: $550 + fees
4. Confirm order
5. Wait for fill

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Step 6: Manage the Trade

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Set Your Exits IMMEDIATELY

• Set at 50-100% gain
• Example: Bought at $5.50, sell at$8.25-11.00
• Use Limit order to sell

• Set at 30-50% loss
• Example: Bought at 5.50, sell if &lt; 2.75-3.50
• Use Stop-Limit order

• Plan to exit by X date
• Don’t hold into last week before expiration
• Time decay accelerates

Entry: $5.50

Exits:
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✓ Target 1: $8.25 (50% gain) - Sell half
✓ Target 2: $11.00 (100% gain) - Sell rest
✗ Stop Loss: $3.50 (36% loss)
⏰ Time Stop: Exit by 12/15 (5 days before exp)

Don't hold through:
- Major resistance
- Earnings (if before exp)
- Last 3 days before expiration

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Daily Monitoring

• Check once at open, once at close
• Don’t micromanage intraday

• Track if nearing targets
• Don’t panic on small moves

• Accelerates in final week
• Exit if not working by halfway point

• If stock breaks support = reassess
• If hits target = consider taking profit

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Common Scenarios and Responses

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Scenario 1: Quick Profit (Up 50% in 2 Days)

• AAPL jumped to $180
• Your $5.50 call now worth$8.50
• 54% profit in 2 days

• ✅ Take profit on half position
• ✅ Move stop to breakeven on rest
• ✅ Let rest run to target 2

• Lock in gains
• Remove risk
• Still have upside exposure

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Scenario 2: Slow Bleed (Down 20% in 1 Week)

• AAPL sideways at $174
• Your call now $4.40
• Down 20%, time decay eating value

• ⚠️ Reassess thesis
• If still bullish: Hold
• If uncertain: Exit for small loss
• Don’t wait for stop loss

• Time is your enemy
• Small loss better than big loss
• Can re-enter later if setup returns

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Scenario 3: Hit Stop Loss

• AAPL dropped to $171
• Your call worth $3.00
• Stop triggered at $3.50

• ✅ Exit immediately
• ✅ Accept the loss
• ✅ Review what went wrong
• ❌ DON’T revenge trade

• Thesis invalidated
• Preserve capital
• Live to trade another day

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Scenario 4: Near Expiration (3 Days Left)

• 3 days until expiration
• Call still slightly profitable
• AAPL at $177 (call at$176)

• ✅ Close the trade TODAY
• Don’t hold to expiration
• Take current profit

• Time decay accelerates
• One bad day = all profit gone
• Not worth the risk

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After Your First Trade

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Trade Review

• Entry timing
• Strike/expiration choice
• Exit execution

• Missed signals
• Held too long
• Entry too early

• Risk management
• Patience
• Technical analysis

Review my AAPL call trade. I bought $175 call
at $5.50, sold at $8.00. What could I improve?

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Keep a Trade Journal

Date: 11/15/2025
Ticker: AAPL
Setup: Breakout above $175
Strike/Exp: $175 Call, 12/20
Entry: $5.50
Exit: $8.00
Result: +45% ($247 profit)
Lessons: Took profit too early, could've
made 80% if held 1 more day. Need to give
winners more room.

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Risk Management Rules

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The 10 Commandments of Options Trading

1. Never risk more than 2% of account per trade
   • $10k account = max$200 per trade
2. Always use limit orders
   • Never market orders on options
3. Check liquidity before entering
   • Volume > 100, OI > 500
4. Set stop loss before entering
   • Plan the exit before entry
5. Don’t hold into expiration week
   • Exit 5-7 days before expiration
6. Take profits at 50-100%
   • Don’t be greedy
7. Cut losses at 30-50%
   • Don’t hope and pray
8. Only trade stocks you understand
   • No random tickers
9. Avoid earnings (at first)
   • Too unpredictable for beginners
10. Start small, scale slowly
    • 1 contract until consistent

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Common Mistakes to Avoid

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❌ Don’t Do This

• Extreme time decay
• Need to be perfect
• 90% expire worthless

• Volatility crush kills options
• Unpredictable moves
• Advanced strategy only

• Unlimited risk as beginner
• Learn buying first
• Completely different skill

• Options can go to $0
• Diversify across trades
• Never bet the farm

• Throwing good money after bad
• Accept the loss and move on
• Reset and find better setup

• Delta, theta, IV matter
• Understand before trading
• Use them for decisions

• Wide spreads
• Hard to exit
• Slippage kills profits

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What’s Next?

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Continue Your Options Education

• Practice with fake money
• Build confidence
• Test strategies

• 1 contract per trade
• Max 2-3 trades open
• Build slowly

• Options Greeks Explained →
• Options Strategies →
• Managing Options Positions →

What options strategies should I learn next after mastering single calls?

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Troubleshooting

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”My order won’t fill”

• Increase limit price by $0.05
• Check if market is open
• Verify options trading approved
• Try different strike with more volume

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”I’m down 30% in 1 day”

• Check if thesis still valid
• Review stop loss
• One day doesn’t define trade
• Don’t make emotional decision

My AAPL $175 call is down 30% today.
Stock dropped to $173. What should I do?

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“Should I roll my losing position?”

• Just close and accept loss
• Rolling is advanced strategy
• Start fresh with better setup

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Success Checklist