Understanding options.
Options are frightening because they look complicated. In reality they rest on an idea you already use in everyday life: paying a small amount today to have a right tomorrow. In this guide I explain them without formulas, starting from zero.
By Stefano Lokar Pignatari · Updated July 2026 · 7 min read
An idea you already know
Options are frightening because of their name and their formulas. But you already use the underlying idea in everyday life.
Have you ever paid a deposit to secure a house? Or paid forinsurance to protect yourself from something unexpected? In both cases you paid a small amount today to have a right, or a protection, tomorrow. Options work in exactly the same way.
What an option is, in one sentence
An option is a contract that gives you the right, not the obligation, to buy or sell something at a fixed price, by a certain date.
To have this right you pay a small amount, called the premium. If it works in your favour, you exercise the right. If it does not, you let it expire: you have lost only the premium. That is all.
Call and put: the two types
There are two types of option, and they are enough to understand everything else.
The call is the right to buy at a fixed price. You use it if you think the price will rise: you have locked in the purchase price.
The put is the right to sell at a fixed price. It is like an insurance policy on the value of what you own: it protects you from a fall.
Who buys and who sells
Here is the point that almost nobody explains. Every option has two sides.
Whoever buys the option pays the premium: they are insuring themselves, or betting on a movement.
Whoever sells the option receives the premium: they play the part of the insurer. They take on a commitment and, in exchange, receive a premium straight away.
Most small traders are always on the side of the buyer. The Sistema Plutonis works, with precise rules, on the side of the seller.
What the premium depends on
How much is the premium of an option worth? It depends above all on three things.
- The time left until expiry: the more time, the more the right is worth.
- The distance between the current price and the fixed price.
- The volatility: how much the market moves. The more agitated it is, the more insurance costs.
A decisive detail: the value linked to time wears away with every day that passes. For the buyer it is a silent cost. For the seller, it is the opposite.
Why they are powerful (and treacherous)
Options allow things that simply buying shares does not: protecting yourself, building tailor-made scenarios, moving positions with modest amounts.
But they are also treacherous. Anyone who buys them at random, hoping for the right move, is playing against the passing of time: day after day the premium loses value. It is one of the reasons why so many lose.
“Options are neither good nor bad. What makes the difference is which side of the contract you put yourself on, and with which rules.”
Do you want to see how they are put into practice?
The Sistema Plutonis book starts from these basics and shows, step by step, how a rule-based way of operating is built, in language for people who do not come from finance.
Discover the Sistema Plutonis bookHow the Plutonis System uses them
The Sistema Plutonis does not buy options hoping to guess the direction. It does the opposite: it sells, collecting the premiums, with a protocol that defines the risk before every trade.
This is what is called non-directional trading: there is no need to predict whether the market will rise or fall. In most scenarios, the trade works out through the simple passing of time.
If you want the complete method, the guide How the Plutonis System works explains it step by step.
Continue the path.
Investing in a non-directional way
Trading without having to guess the direction of the market.
Read the guide → The basicsWhat derivatives are
Where the value of options and futures comes from.
Read the guide → The methodHow the Plutonis System works
The non-directional method, from start to finish.
Read the guide →Not just theory. Real people.
A method of his own, beyond the business
How he learned to manage his savings on his own, without it becoming a second job.
Protecting what he has built
From a long career as an executive to an extra income built with method.
Clear rules, at last
From many courses without a method to a repeatable protocol, applied on his own.
Now you know how options work. And how to use them with method?
Understanding is the first step. The second is finding out whether the method suits your profile. It takes a few minutes: we read your situation and, if you are not suited, we tell you honestly. No pressure, no commitment.
Do you want the full picture of the method? Read How the Plutonis System works. Educational content, not financial advice.