Collection of Advanced Options concepts for Options traders

These advanced concepts will enhance your understanding of Options trading, Options market structure and specific topics
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Instructed by Hari Swaminathan Business / Finance
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  • Lectures 9
  • Length 1 hour
  • Skill Level Expert Level
  • Languages English
  • Includes Lifetime access
    30 day money back guarantee!
    Available on iOS and Android
    Certificate of Completion
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About This Course

Published 4/2015 English

Course Description

In this FREE course, Options traders can look to fill gaps in their understanding of certain advanced concepts like Put Call Parity, Beta Weighting, Portfolio Hedging and more. The VIX Index plays a key role in Options trading, but its quite surprising that even many experienced Options traders don't fully understand the way it behaves. These mini-courses are once again insightful "nuggets" that help make Options traders more well-rounded in their knowledge and skills.

The topics covered in this Advanced Options concepts course are as follows.

Put Call Parity

SPX RUT NDX DJIA Intermarket Analysis

Beta weighting and hedging

Active Trader DayTrade Max Stocks Futures Options

Backtesting Using ThinkBack and On-demand

Volatility Futures (/VX)

Non-directional Strategies (Delta neutral strategies)

Straddle Basics

Iron Condor Setup


What are the requirements?

  • Single options, and some basic understanding of vertical spreads

What am I going to get from this course?

  • If you trade Options already, this collection of insightful nuggets will significantly enhance your skills
  • Get a deeper understanding of Option market concepts like Beta Weighting and advanced portfolio hedging using Options
  • Learn to look back in time and backtest any strategies using advanced analysis tools
  • Understand the principles behind Non-directional strategies (also called Delta Neutral strategies)
  • Master the setup considerations for advanced strategies like Iron condors and Straddles

What is the target audience?

  • Options traders who have an intermediate knowledge of Options

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: Advanced Options concepts
06:37

Free course on Put Call Parity, a unique relationship between the prices of Call options and Put options that must always exist at all times. In the Options world, there is a strict relationship between the prices of Puts and Calls. This relationship is called Put Call parity.

Rather than go into the theoretical details of what this relationship is (which can be very involved), it's best to understand the impact of Put Call parity by using a real-world trading example.

In this video, we take an example of a credit spread (Bear Call spread), and to understand the relationship, we look at an In the Money (ITM) Bear Call spread. For this position, there is a corresponding and equivalent position using Puts on the other side. Not surprisingly, this equivalent position is the Bear Put spread. Both these strategies will have (or should have) identical risk and reward characteristics. If it does not, then there exists an "arbitrage" opportunity, and the big players will move in to capture this risk free arbitrage using either Stock or Futures.

If you've ever wondered why Call Options also increase in value when Implied Volatility is increasing and the market is crashing, it is because of the Put Call parity. An increase in implied volatility will increase the value of calls and puts regardless of the direction the market or stock is taking. If this does not happen, then a Put Call parity arbitrage will open up. If it does, then usually this arbitrage opportunity will quickly close because of the big players moving in to get some risk free returns.

05:13

Intermarket analysis is the study of different indices and their performance differences. This example shows these differences in May 2014. This video studies the divergence between the 4 major indices -- SPX, NDX, RUT and the DJIA.

The troubling aspect is that the RUT is clearly in correction territory and is down about 10%. The Nasdaq (NDX) which was also down close to 10% has recovered about half that loss and is now down about 5%. The SPX and the DJIA is at all-time highs, or close to it.

Obviously, this is quite a large divergence between the major indices, and once again the conclusion is -- something has to give. Either the RUT and NDX have to move up to "catch up" to the other two -- or the SPX and DJIA have to come down. Given that we're seeing a divergence in the Bond markets also, perhaps this is a bit more evidence that a correction could be underway.

A small consolation is the price action of the RUT yesterday as compared to the SPX or the DJIA. Watch the video below for a detailed discussion.

09:23

If you have a portfolio of stocks and/or Options, and are concerned about a crash, you can use this technique to hedge your portfolio with 1 trade.

Hedge your entire portfolio with 1 tradeProtect against temporary crashes

How to use Beta weighting to hedge your portfolio

Regardless of how many stocks or Options there are in your portfolio, you can quickly hedge the entire portfolio with one trade. This free mini-course shows how you can protect against short term market and/or geopolitical event risks.

05:31

Understand the complex relationship between the VIX Index, the VIX Options and the VIX Futures.

How are VIX Options pricedAre the VIX Options really a good hedge

The VIX Options are a unique instrument in the markets. If you've ever seen your VIX Call options not increase in value even though the VIX spikes, there's a very good reason for this. Understand how the VIX and the Volatility Futures work.

10:48

With Options, you can construct non-directional strategies. This means the strategy benefits regardless of the direction of the stock move.

In non-directional strategies, you don't care if the Stock goes up or down. Your strategy profits from a move in either direction. The strategy starts out Delta Neutral - or at least you should try to construct it that way. But this does not mean your position will remain Delta neutral forever. In fact, your position will achieve a +ve Delta or a -ve Delta bias, depending on the stock's movement. But these strategies have one clear advantage over others. You don't have to be right in forecasting the direction of stock movement, and that fact alone put these strategies in our Favorites.

05:13

Free course on the Setup considerations for the Straddle. The Straddle is the ultimate Volatility trade and falls under non-directional trading.


The Straddle trade is very popular - Options players love it for the fact that you can make money whether the stock goes up or down. As long as it makes a big move in either direction, the Straddle makes money. What many won't tell you are the pitfalls in the Straddle trade. The video below discusses a Straddle trade on Priceline (PCLN) on the Dec series with about 31 days to expiry.

The key features of a Straddle trade are -

- You're Long both a Call and a Put Option, and this is generally put At the Money

- Both Long Options have a Delta of approximately 0.5 (because they are At the Money)

- The position itself is a Delta neutral position to begin with (+ve Call delta neutralizes -ve Put delta)

- Since you're Long both a Call and a Put, your position is Theta negative (twice over)

- Since you're Long both a Call and a Put, your position is Vega positive (twice over)

- You can reduce loss from Theta by going into further months, but you will face higher Vega exposure

- You will also have a wider breakeven range because you pay more for further out Options

- Your max loss (debit on the trade) is the what you pay for the Call + what you pay for the Put

- You are guaranteed a profit if the stock moves more than the debit on the trade in either direction

Ok, so that's the basics. This video explains this setup in detail.

10:34

A free mini-course on all the considerations for putting an Iron condor trade, one of the most popular advanced Options trading strategies.

The Iron Condor is one of the most popular advanced strategies amongst advanced traders. There are several reasons for this - the trade is non-directional so you can profit from movement in either direction. You get to keep double the credit for less risk than if you'd just put a normal credit spread. And most importantly, one leg is an automatic winner. It's hard not to like an Iron Condor - and its got the coolest name in town :). We show you how to setup the Iron condor, and the things to watch for. We also cover Iron Condors in detail in the Advanced Modules VI and VII. CAUTION - do not attempt an Iron Condor unless you're a master at putting on credit spreads and managing them successfully

07:08

Mini-course on how to use the Active Trader feature on Thinkorswim to trade Stocks, Futures as well as individual Options intuitively.


Active Trader DayTrade Max Stocks Futures Options

Quick way to trade Stocks, Options and Futures


07:30

Use powerful tools on the ThinkorSwim platform to backtest your trades. Understand how ThinkBack and Think On-demand works.


Backtest your trading strategies accuratelyLearn where things went wrong

And improve your trading strategies with these powerful Backtesting tools on the Thinkorswim platform.

Options Advanced Quiz
3 questions

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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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