What you're buying
An option is a contract that gives you the right — but not the obligation — to buy or sell 100 shares of a stock at a fixed price (the strike price), by a fixed date (the expiry). You pay an upfront fee for that right, called the premium.
Calls vs. puts
A call gives you the right to buy at the strike. You want the stock to go up — the higher it goes above your strike, the more your call is worth.
A put gives you the right to sell at the strike. You want the stock to go down — the lower it falls below your strike, the more your put is worth.
Intrinsic value at expiry
At expiry, an option's value comes down to one number: how far the stock price is past the strike, in your favor. That's called intrinsic value. If the stock never gets past your strike, the option expires worthless and you lose the premium you paid — nothing more, nothing less.
Why this asymmetry matters
Notice the asymmetry: your maximum loss is always capped at the premium you paid, no matter how wrong you are. That's the appeal of buying options — and exactly why selling them (which we'll get to in the Strategies module) carries a very different risk profile.