# skill-options-principles — checklist

Review before education output. This list does not approve a trade.

## When to use
- [ ] The question is how options work, not which contract to trade.
- [ ] A later playbook needs a shared vocabulary: calls, puts, debit versus credit, defined versus undefined risk.

## Setup
- [ ] Use {symbol} as the placeholder and replace it with the ticker that was named.
- [ ] Single-leg: buy or sell one call or one put.
- [ ] Multi-leg: vertical spreads, iron condors, butterflies, straddles, strangles, calendars, and diagonals.
- [ ] State the outlook the structure expresses (bullish, bearish, or range) without turning it into an instruction to trade.

## Rules of thumb
- [ ] Name time decay (theta) and volatility (vega) when they drive the example.
- [ ] Long options can expire worthless. The premium paid is the defined loss.
- [ ] A naked short call has undefined risk. Do not present it as a routine structure.
- [ ] Mention assignment and early exercise when a short option is part of the example.

## Pitfalls
- [ ] Shortening or skipping the disclosure.
- [ ] A payoff sketch treated as a forecast.
- [ ] Examples that ignore commissions, fees, margin, interest, and taxes.
- [ ] Mixing a single long option with a spread and calling both the same risk.

## Disclaimer
- [ ] Disclosure is present: risks, the options disclosure document, and omitted costs.
- [ ] The answer is education. It is not a signal, a recommendation, or an order.