In this paper, we first review literatures which examine how the formation of an options market impacts on the US stock market in the 70’s, and then discuss potential advantages for Taiwan to develop its domestic options market. For demonstration purpose, option prices of a Taiwanese stock are simulated with the Black-Scholes model. Various examples of trading strategies are introduced step by step. It is hoped that the presentation in this paper will help investors and business school students to be acquainted with the fundamentals of options.