Advanced Options Concepts - Probability, Greeks, Simulation

Deep dive into Probability, Greek subtleties, and Options simulation. Learn how they affect Option prices and strategies
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Instructed by Hari Swaminathan Business / Finance
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  • Lectures 10
  • Length 2 hours
  • Skill Level Intermediate Level
  • Languages English
  • Includes Lifetime access
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    Available on iOS and Android
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About This Course

Published 2/2013 English

Course Description

This course covers three advanced Options concepts - Probability, Advanced Options Greeks analysis and Options Simulation

SECTION I - DEEP DIVE INTO PROBABILITY ANALYSIS

While Probability has been mentioned a few times in previous courses, we take a deep dive in this course. Having a finely tuned probabilistic mindset coupled with good analysis is an absolute must in financial markets. This course shows a few different ways of looking at Probability and how investors can create strategies to put Probability on their side.

 

SECTION II - DEEP DIVE INTO THE OPTION GREEKS

 

This course also takes a deep dive into the four Greeks - Delta, Gamma, Theta and Vega. We introduced these concepts in the previous module, but it is time to take their understanding to a new level. The Greeks are the path to putting your strategies on "Auto-pilot". We explain the subtleties of all the Greeks - very cool stuff, put your Math hat on... 

 

What you will master

 

  • What is the importance of statistical price modeling in the stock markets
  • Why is Standard Deviation an important metric
  • What are the pluses and minuses of statistical modeling
  • How can we choose strategies using Probability as a signpost
  • Take your understanding of all the four Greeks to a new level
  • Master the subtleties of each of the Greeks
  • Look at option modeling from a mathematical standpoint

 

SECTION III - OPTIONS ANALYSIS AND SIMULATION

 A good trade entry based upon Volume / Chart / Technical analysis sets you up for success from the get-go. But before you put a trade on, you need to perform Options analysis and simulation to understand how your position will behave under a diverse set of market conditions. Once you perform this Options analysis, you can immediately spot your weak points and you're prepared for them. Analysis and Simulation are as important as finding a good trade entry. In this course, we provide a complete roadmap to simulate every possible market condition BEFORE you put the trade on. This kind of analysis may take 30 minutes, but its well worth the time spent.

 

What you will master

 

  • How will your position behave for a + / - 5% move in your stock
  • Options analysis before you put your trade on
  • Options simulation to know where your profit zone is
  • What is the impact of Time decay on your position
  • What will Implied Volatility changes do to your position
  • Simulating the effects of two variables on your position
  • Simulating all three variables
  • Stress testing your trade

 

 

What are the requirements?

  • Basic Options knowledge of Calls and Puts
  • Basic knowledge of Option Greeks

What am I going to get from this course?

  • Master the concept of probability as it applies to Options markets
  • Understand the various subtleties of all four Option Greeks
  • Put an "edge" into your trades in your favor with these advanced analysis techniques
  • Know how your Options position will perform under all conditions BEFORE YOU PUT YOUR TRADE ON.

What is the target audience?

  • People familiar with Options basics like Buying Call Options and Put Options
  • Anyone with basic knowledge of Options spreads
  • Anyone intending to optimize their credit spreads and other Options strategies

What you get with this course?

Not for you? No problem.
30 day money back guarantee.

Forever yours.
Lifetime access.

Learn on the go.
Desktop, iOS and Android.

Get rewarded.
Certificate of completion.

Curriculum

Section 1: Deep Dive into Probability
04:34
This is an introduction to the course. In this course, we're taking a deep dive into 3 important concepts in Options trading - Probability, Advanced Greek analysis and Options simulation
10:10
Two new columns are introduced on the Thinkorswim platform - the Probability of going ITM and the probability of Touching. Both these columns provide insightful information to an Options trader
18:02
A continuation of probability analysis, Standard deviation, the ideal strike prices to set up short strike Options, the analysis of the buffer zone created by the premium collected and a study of probability curves.
Probability Quiz
4 questions
Section 2: Deep Dive in the Option Greeks - Subtleties of Delta, Gamma, Vega and Theta
19:11
We studies the 4 Greeks in an earlier course. In this section, we take a deep dive into each of the Greeks. This lecture covers Delta, Gamma and Vega
06:56
This lecture covers Theta - time decay
Option Greeks Quiz
5 questions
Section 3: Options Simulation - The key to understanding your position
06:24
The importance of Options simulation. Options simulation is the third leg of the Options trading stool - a critical requirement for an Options trader
18:43
Simulating an Options position for the three variables - Price, Time and Volatility on an individual basis.
15:44
Simulating an Options position for the 3 variables when all 3 variables are changing. This is a realistic simulation of actual market conditions
08:13
Introduction of Theoretical Price on Thinkorswim. This can be a useful column in many cases.
05:54
The concluding lecture for this course. 

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Instructor Biography

Hari Swaminathan, Options Mentor, Financial markets educator, Trader, Investor

Knowledge. Strategy. Execution.

Hari Swaminathan is the founder of OptionTiger, a cutting-edge Options Mentoring company, and a full-circle educator in all areas of Financial Markets, and developer of proprietary Intellectual Property around enhancing base case Options strategies (which favor the Market Makers) and turns that deficit into a massive EDGE on the trader's side.. Like building a "powerful Strategy for all Option Strategies". Hari is self-taught in Options and actively trading these instruments for almost 10 years. Hari has a Bachelors degree in Engineering from India, and MBA's from Columbia University in NYC and London Business School in London UK. 

More than ever, its become important for normal people to take charge of their financial situation, and attempt to create additional income streams, or build wealth for the Long Run, in a smart, risk-controlled manner. This is precisely my mission. Through Knowledge, Education, and disciplined Money management approaches. Video-based courseware, Practical workshops , a 4-week Live Mentoring program and several other channels.

Let's break down the Options game in a brutal but realistic manner. 

The Pluses

1. Options were invented out of thin air. And the people who invented it won Nobel Prizes for their invention (Fisher and Black). It is purely a "Mathematical" concept, with no real connections to the external except for one, that's defined implicitly  by its deign.. Its the relationship between an Option and any Asset in the real world,.The associated relationship with any asset's price behavior in precisely defined time frames. In common language, it tries to answer a fundamental question underpinning all of humanity. What kind of mathematical model can help us define the risk of certain events happening, or not happening. The model is very similar to the Insurance industry who basically provide the odds calculated bty large and wide samples of data. It's only then they can provide somewhat of an accurate quote, based on Data science, Statistical Modeling and a heavy dose of Probability theory.

2. This gives birth to very complex but interesting  analytical scenarios. It also gives us the ability to model Options with a set of tools like a car dashboard., but much more powerful and sophisticated approaches. In many cases, you don't need to see what the stock or the larger markets are doing. These numbers are embedded in the mathematical formulas that underpin Options.

3. Because everything in Options is defined in mathematical terms, its also important to realize that OPTIONS will always be the same. The math behind Options will always be the same. forever. Unless they discover serious flaws iin the formulas that tries to determine the fair Option price based on the kind of asset, its price action, Highs and Lows as defined in statistical terms over a certain fixed time frame. It should make some amount of intuitive sense, even if you can't nail it precisely at first..Things like Price Volatility in the "underlying asset, the time lkeft for the Option to expire (Every Option is created with a fixed period of life, and all Option die at some time (They expire) . But the short life that many Options go through, its a wild life, filled with roller coaster like adventures,. 

4. As an analogy, you can make comparisons with the game of Chess. You may agree that Chess is a game of "skill". It's a game of strategy and how well you can plan (ahead) to attack, defend or take a neutral position . We also believe that Chess is strategy-focused and depends upon certain mathematical  properties. The reason we know its a game of skill is : Try to play 100 chess games with Kasparov or Anand. Normal people are guaranteed a loss in all 100 games. And why do we know its underlying features are mathematics based L The reason that computers like Deep Blue can beat Kasparov by a majority, and as computer processing power has increased exponentially by many 1000's of times,, the human number crunching powers have pretty much been constant. So today all professional Chess players refuse to play the machine, because while they used to lose to them by majority, today it's almost guaranteed that they WILL LOSE EVERY GAME

5. Lastly Options are just like Chess. They are a "skill set", and requires acquiring a deep set of analytical skills much more so han most skill sets, but can only be  mastered over a period of time. We cannot turn into a Kasparov in a matter of weeks or even a few month. It does NOT work like that. But once you go through this process that can go for 1 to 2 years or more, there is a powerful light at the end of that tunnel. You build a skill set for life which means things like Age or geographical location, Lifestyles, Weather are no longer a barrier to create a consistent income streams strategically regardless of who you are, where you are, or how old you are. This is POWERFUL stuff. Now let's look at the negatives.


MINUSES


Options are easily the most fascinating financial instrument with several upside benefits, but they an equakky powerful set of minuses. 

1. Options have a steep learning curve. Gon't expect to become Kasparov in a couple of months. Or even a year or two. You caan bbuild a Kas[arov or Anand in those timeframes. And why is this important to realize, Because we are playing a Kasparov or Anand every time we enter the Options market. Market Makers who are 99% of the time, the counter party to all Options trades, are Options professionals. with 10 to 20 years with exoerience in Optioms. . The company has entrusted the responsibility of providing liquidity to the market which is a :legal duty" but can have disastrous consequences. While we have hours tp plam our attaacks, the Market Maker literall seconds for a trade. In a normal  day, a market maker can do many thousands of trades. One can omly be in awe of their skills. 

2. If you're interested in Options, sp=o NOT approacg it with a mondset of or rewuirement to ,aking ,omey. This is not only npu goimg to happen, but iys a recipe for disaster. It's like a student of Medicine waning to ptactice thei skiils after 2 monyjs of study, Keepimh with the Chess analogy,, because its the best way to think about Options before you actually know Options. To develop a meaningful batting average, you will need Time, Patience, and Disipline. They domt develop overnight. Ifyou focus completely on the learning ideally practicing on paper money accounts

are powerful, but they have a learning curve. I've broken down all the complexities of Options in simple language that everyone can understand. The courseware uses real trade examples, always highlighting the pluses and minuses of every investment situation. Options provide the best way to take advantage of bull cycles, bear cycles and everything in between.

As someone that has self-learnt Options and through making mistakes, I can tell you Options trading is not something you should take lightly. You will hear people talking of fantastic triple and quadruple digit returns. I'm here to be brutally honest with you - 

- Be very very careful in the first 12 months of Options trading. 

- This is when everyone is the most vulnerable to losing money. 

- Your main objective during this time is to focus on learning this craft and not lose money during this time. 

Having said that, if you can get past the first 12 months and acquire the expertise in a systematic manner, true financial independence awaits.

You can trade Options from anywhere in the world, regardless of how old you are. You never have to worry about job security any more because you have a skill that can produce consistent wealth month after month. 

But you have some serious but exciting work to do before you can get there, and I'm here to help you in this journey. 

Watch my Free Course for Options Trading Beginners where I draw out a detailed roadmap of what this 12-month journey looks like, and the specific strategies you should master during each step of this learning process. 

Watch my Free Mini-courses or my YouTube channel , all of which have the highest quality of education material. 

And join me in my UDemy courses, where I share cutting-edge theoretical knowledge mixed with practical insights, strategy and impeccable execution through live trading examples. 

If you have any questions at any time, please feel free to message me on Udemy.

The order to follow on my Udemy courses

Comprehensive guide to Financial Markets, Investing and Trading

Options Trading Beginners Bundle (3-course Bundle)

Advanced Options Concepts

Options spreads and credit spreads Bundle

Technical analysis and Chart reading Bundle

After this, the order does not matter. You can take any of the courses as per your interest.

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