Buying Call and Put Options - Options beginner strategies
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SECTION I - BUY A CALL OPTION (CHIPOTLE MEXICAN GRILL)
Buying a Call Option is the most basic of all the Option strategies and is the most efficient strategy to optimize a bullish outlook on a stock. In this course, we take the example of Chipotle Mexican Grill (CMG) and show how the trade played out. We analyze the rationale behind entering the trade, the risk/reward profile, chart analysis and point of entry, choice of expiry and "moneyness" of the Option, time decay considerations, margin requirements, profit expectations, exit criteria, Greek analysis, its Profit and Loss profile and various other considerations. We provide a 360-degree analysis before trade entry. This is a real trade and over 15 days, and we navigate the trade to its exit point.
SECTION II - BUYING A PUT OPTION (FXE EURO ETF)
Buying a Put Option serves two purposes - exploit a bearish move in the stock or be the ultimate protector of your stock. In this part of the course, we take the example of the Euro ETF (FXE) and show how the trade played out in about 25 days time. We analyze the rationale behind entering the trade, the risk/reward profile, chart analysis and point of entry, choice of expiry and "moneyness" of the Option, time decay considerations, margin requirements, profit expectations, exit criteria, Greek analysis, its Profit and Loss profile and various other considerations. We provide a 360-degree analysis before trade entry. We show you how to "let your winners run" in a controlled manner.
SECTION III - STRATEGY AND OPTIMIZATION
The Option strategy optimization course brings all the 4 Options strategies together. The 4 strategies are comprised of 2 bullish and 2 bearish strategies, but how and when should we choose a particular strategy over the other. We create a helpful "4 strategies box" to distinguish and connect one strategy to the other. Most importantly, what are all the considerations before we choose a strategy. Our choice of strategy depends not only on what the stock is currently doing, but also on various market externalities as well as a few key Option metrics like Implied Volatility. This course also provides a sneak peek into advanced Option topics like the VIX (Fear index"), trade simulation as well as trade adjustment parameters.
SECTION IV - SINGLE OPTION ADJUSTMENTS
This course studies the need for Option adjustments, and why adjustments are as critical to the success of your position as good entry or analysis. We consider all the four basic strategies - the Long Call, Short Call, Long Put, and the Short Put and look at various adjustments to these positions if they get into trouble. Every investor has a "pain point" - this is the point at which they adjust their position. Applying a rigorous approach to this pain point enables investors to control risk while maximizing the opportunity to profit. The course also discusses various details like early adjustments, over-adjusting and adjusting profitable trades as well as the importance of the investor's outlook for the stock when considering adjustments.
This is Course III of a 4-course step-by-step program to achieving Options mastery.
Course I - Introduction to Options - Learn about Call Options and Put Options is a detailed step-by-step explanation of Options, Call Options and Put Options with theory and practical application with Apple (AAPL) Options
Course IV is on Options Spreads - This is the heart of Options Trading. Once you master Options spreads, you have acquired a skill that can generate consistent monthly income for the rest of your life.
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|Section 1: Long Call trade (Buying Call Options on Chipotle Mexican Grill)|
|When do you buy a Call Option or a Put Option ? What are the considerations ? The most important criteria is of course your outlook for the stock. If you feel that the stock is going to go up (based on some analysis), you buy a Call Option, or if you feel the stock is going to go down, then you buy a Put Option. Where Options are different from Stocks is that you also need to have a timeframe for your outlook.|
|We picked Chipotle Mexican Grill as our candidate for the Long Call. Why did we pick CMG ? Any time, you enter a stock, you need a basis or a trade rationale. This is the most important consideration. And once you enter it, you must have preset targets for exit based on current conditions. And its always a good practice to calculate your exit point based upon the Return on Investment (ROI). This is a live trade all the way to exit.|
|Section 2: Live Long Put trade on FXE - Euro ETF|
|Why did we choose the FXE as our candidate for the Long Put ? And how did we do on trade entry ? And once the trade goes in our favor, how can we manage the trade to ride a winner nicely.|
|Part of good trade management is the ability to protect your winnings. Trading platforms provide us with sophisticated tools to achieve this. This lecture shows you can protect your winnings in a nice trade.|
|The trade is absolutely "milked" for winnings. The trade lasts for about 25 days where we ride the winnings with sophisticated order management.|
|Section 3: Strategy and Optimization of Single Option Trades|
|We've always mentioned that a seller's profile is different from a buyer's profile. The risks and rewards are different. In fact the risks are very high. In this lecture, you will become clear why the seller's profile is like that of the Insurance company - low rewards, high risks.|
|When dealing with Single Option strategies, we have 4 choices. You can go for a Long Call, Long Put, Short Call and Short Put. How do you choose between these strategies ? Bear in mind, once you consider all the factors, one of these strategies is going to be the ideal one for the outlook, and you must pick that one.|
|Before entering a trade, there are several considerations - and one of the primary ones is the "trend" of the overall market. This case study analyzes the S&P 500 Index against a few major stocks like AAPL, GOOG and PCLN.|
|Strategy Optimization is a case study on Linkedin (LNKD) - Which strategy is appropriate at this time for LNKD and why.|
|Similar case study on Caterpillar (CAT). The goal is to become better in identifying good trade ideas and good entries.|
Criteria for Long Options
|Section 4: Adjustments for Single Options|
|Adjustments are the the third leg of Options trading which everyone must master. Adjustments are an art, and some of it will come only with experience in different situations. However, one can get a head start if you know what to look for and what to do.|
|Discussion of the types of adjustments you can make for a Long call position.|
|This lecture is a discussion of the kinds of adjustments you can make for the other 3 single Options.|
|This is the conclusion of this course. A sneak preview into the next course is provided.|
Strategy and Adjustments Quiz
Knowledge. Strategy. Execution.
Hari Swaminathan is the founder of OptionTiger, a cutting-edge Options education and trading company based in Washington D.C.. Hari is an entrepreneur, everyday person and a self-taught Options expert for over 8 years. Hari has a Bachelors degree in Engineering from India, and MBA degrees from Columbia University in NYC and London Business School in the U.K.
More than ever, its become important for everyday people to take control of their financial situation, and create additional income in a smart, risk-controlled manner. This is precisely my mission. Through knowledge, education and investment discipline. Options 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. Options are a mathematical and strategic game much like Chess, and no amount of technological advances can make this skill obsolete, because the fundamentals of Options are never going to change.
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.