If I buy the DEC PUT 80, then it will expire on the 3rd friday of december. Anything above 80 in december, I lose my money. Anything below 80 I will get $100 (an option is 100 shares) for every dollar below 80, per option.
I am paying $1.36 for one put option (= $136)
If the price of the stock doesn't go down, then my option will become worth less as we get closer to december (because the chances of hitting 80 become less and less).
Call options work the opposite way, now you are betting that the stock will go up.
It's very hard to make money this way. You need to look carefully at support levels etc. You have to time everything right. I use it to hedge against a correction or market crash. If NFLX loses half of its value during a correction or crash, then you will make a lot of money because there's leverage. But I can't lose more than my investment.
Most of the time you will lose your investment, obviously, because if the stock trades flat, you will lose too.
You can read up about it on the internet. But you really need to have a strategy with this one. Don't just gamble because you will lose for sure.
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