Options Trading in plain English for beginners

About Options Trading in plain English for beginners

Options

are _derivative instruments_ that are widely used in the _financial markets_ due to their

versatility

and

range of strategies

that can be implemented whether on their own or in combination with other options and/or stock.

Options

can be used to achieve different

goals

, some of which _can only be implemented with options or options strategies_ due to their characteristics and special properties. Here are some of the _practical uses for Options Strategies_ :

• Protection:

Limiting the _risk of large losses_ on existing assets _(buying a Put, buying a Put Spread, etc)_

• Speculation:

Profiting from an underlying's _bullish or bearish price action (buying a Call, buying a Put, etc.)_

• Income generation on existing positions:

Managing risk on _existing positions_ to generate an income stream based on Options Positions _(Covered Call, etc.)_

• Leverage:

Controlling a position worth a large notional amount with _only a fraction_ of the required capital _(buying a Call, buying a Call Spread, etc.)_

• Diversification:

Diversifying a portfolio's components using Options and _their inherent low capital_ requirement _(buying calls on Indices/ETFs , buying Puts on Indices/ETFs, etc)_

• Flexibility in their use as Strategic Instruments:

Profiting from changes in _Implied Volatility_ , from the _passage of time_ or from the _magnitude of a price move regardless of its upward or downward direction (selling a Straddle, selling an Iron Butterfly, etc.)_ In this course you will learn

all you need to know about Options Trading

, _analysis, evaluation, strategy design, maintenance and monitoring_ as part of a Portfolio

It doesn't matter

how extensive your

existing knowledge of Options

or Financial Markets is. In this course you will find

all the tools you need

to trade options _efficiently_ and _complement_ your existing portfolio or _focus your entire methodology_ in the wide variety of options strategies that we will analyze conceptually, theoretically and in practice. The course's

structure and content

will help you understand

all the necessary concepts

sequentially and _in a clear and concise manner_. We will primarily use _visual and graphical_ material to help make _complex concepts easier to understand._ This is often an initial hurdle on your path towards efficient use and mastery of Options trading and we will

make sure that nothing stands on your way

to efficiently and profitably trading options. As part of a

balanced approach

among _concepts, theory and practice_ we will use the

paperMoney by thinkorswim

Options Trading platform, with information accessed _directly from US Financial Markets_. Detailed instructions on how to gain _access this platform_ and also how to _create a demo account_ will be provided as part of your course. With this, you will be able to _follow all the explanations and transactions on the platform_ along with us using _real market data_. Finally, as part of an ongoing process to ensure that you get the most out of this course and that _you are ready to either start your options trading journey or take your options trading to the next level_ , you will be asked to

take a quiz

_after each section_. You will then _be able to know which options concepts and techniques you have mastered and which areas need further attention and reinforcement_ , for which you will be

taken directly to the lecture

where this material can be reviewed.

Course Summary

1. Call Options 101:

Introduction to the concept of a _Call Option_ as a contract that gives the buyer the _right to purchase_ an asset at a predetermined price on or before the contract's expiration date

2. Put Options 101:

Introduction to the concept of a _Put Option_ as a contract that gives the buyer the _right to sell_ an asset at a predetermined price on or before the contract's expiration date

3. Options for Stock Traders:

Introduction to Options for those _already familiar with trading Stocks_

4. Basic Option Concepts:

Building blocks that serve as the foundation for a _thorough understanding of Option Pricing and Trading_

5. Volatility

Probably the most important and often misunderstood concept in Options Trading: Volatility or _how widely an underlying's price is expected to fluctuate_ between now and a certain date

6. Options Greeks: Delta:

Introduction to Delta, _how an Option Price changes as the Underlying Price changes_ , also used as a proxy for _probability of expiring in-the-money_ and as a _hedge ratio_

7. Option Greeks: Theta:

Introduction to Theta: _how an Option Price changes as time passes_. A measure of _time decay_

8. Option Greeks: Gamma:

Introduction to Gamma: _how Delta changes as the Underlying Price changes_.

9. Option Greeks: Vega:

Introduction to Vega: _how an Option Price changes as Implied Volatility changes_

10. Getting ready to analyze Options Strategies:

Access to a _real trading platform_ to practice and follow along with our analysis of the different options strategies reviewed in the following sections

-------------------------------------------------- Options Strategies --------------------------------------------------

11. Buying a Call:

Option Strategy Analysis: _Long Call_

12. Buying a Put:

Option Strategy: Analysis: _Long Put_

13. Selling a Put:

Option Strategy Analysis: _Short Put_

14. Selling a Call:

Option Strategy Analysis: _Short Call_

15. Covered Call:

Option Strategy Analysis: _Covered Call_

16. Vertical Debit Spreads:

Option Strategy Analysis:_(Bull) Long Call Spread and (Bear) Long Put Spread_

17. Vertical Credit Spreads:

Option Strategy Analysis: _(Bear) Short Call Spread and (Bull) Short Put Spread_

18. Strangle and Iron Condor:

Option Strategy Analysis: _Strangle and Iron Condor_

19. Straddle and Iron Butterfly:

Option Strategy Analysis: _Straddle and Iron Butterfly_

20. Calendar Spreads:

Option Strategy Analysis: _Call Calendar Spreads and Put Calendar Spreads_

-------------------------------------------------- Options Strategies --------------------------------------------------

21. How to trade the VIX:

Trading the VIX using _VIX Futures, VIX ETFs and ETNs and VIX Options_. Impact of _contango and backwardation_ on the pricing of VIX Products

22. VIX calculation and settlement of VIX Futures and Options

Understanding what _VIX_ represents and how it's calculated. Impact of the _settlement_ process on _VIX Futures and VIX Options_

23. Advanced Option Concepts:

Introduction to techniques and strategies that will help you _maximize the advantages and versatility_ that options and options strategies provide

24. Dividend Risk:

Understand the impact of _dividends_ on options and options positions

25. Adjusting and rolling Options Positions:

Introduction to the concept of m _anaging existing options positions_ by _adjusting or rolling_ them as a response to changing market conditions

26. Options Portfolio Management

Managing an _Options Portfolio_ and all its components to _maximize profits and minimize risks_

27. Differences between current P/L and P/L at expiration for Options Strategies

Understand the interaction between underlying price, time to expiration and implied volatility when analyzing your options positions' payoff diagrams.