Options foundations

This module is the floor. If you've never traded an option before, start here. The articles below cover what an option actually is — a right, not a thing you own — and walk through the two sides of every contract, what the options chain on a broker screen actually represents, and why SPX options have become the dominant venue for zero-days-to-expiration (0DTE) trading.

The mechanics here apply to any listed option in any market. The SPX-specific framing — cash settlement, European-style exercise, the §1256 tax treatment — comes up because it's what the rest of the guide relies on. Equity options on SPY, AAPL, or any other underlying work on the same conceptual model; the operational differences are covered in SPX vs SPY vs Equity Options.

If you've already traded options on equities for a while, the foundations articles are still worth skimming for the SPX-specific quirks. Cash settlement is the one that trips up the most people coming from a stock-options background, and 0DTE has its own intraday dynamics that don't show up in weekly or monthly expirations — covered later in the dynamics module.

Once you're comfortable with the vocabulary here, the next module — Pricing Fundamentals — covers what actually makes an option's price move, before any of the greeks get introduced.