Options Market - FRM Part 1 - FMP

Master Options, Pricing, Payoffs, Strategies & Risk Management

Created byMidha Fin

Last updated 9/2026

English

What you'll learn

Fundamentals of Options – Understand call and put options, key terminology, and how options work.
Options Payoffs & Profit/Loss – Learn how to calculate and interpret option payoffs, profits, and losses.
Option Pricing – Understand the key factors that influence option prices and premiums.
Put-Call Parity – Learn the relationship between European call and put options and how to identify pricing relationships.
Volatility – Understand historical and implied volatility and their importance in options pricing.
Option Greeks – Master Delta, Gamma, Vega, Theta, and Rho and understand how they measure risk
Hedging with Options – Learn how options can be used to manage and hedge financial risks.
Option Strategies – Understand strategies such as spreads, straddles, strangles, and combinations.
Binomial & Black-Scholes Models – Build an understanding of major option-pricing models and their applications.
Risk Management Applications – Learn how options are used by financial institutions and risk managers to control market risk.

Course content

1 section • 8 lectures • 1h 44m total length

Introduction1:05
Moneyness3:38
Payoff4:58
Payoff vs Profit28:53
Exchange traded options on stocks25:10
Margin Requirements26:44
Over the counter market0:45
Candidates Query12:56

Requirements

Basic understanding of financial markets and instruments
Familiarity with stocks, bonds, and derivatives
Basic knowledge of probability and statistics
A basic understanding of risk management concepts is helpful but not mandatory
Students preparing for the GARP FRM examination will benefit the most from this course.

Description

Options Market – FRM – GARP

Welcome to this comprehensive course on the Options Market, designed to help students build a strong conceptual and practical understanding of options and their role in financial risk management. The course is particularly useful for students preparing for the Financial Risk Manager (FRM) examination and learners who want to understand how options are used by financial institutions, investors, traders, and risk professionals.

In this course, you will explore the fundamental concepts of options, including call options, put options, option contracts, strike price, expiration date, premiums, moneyness, intrinsic value, and time value. You will also learn how option prices behave under different market conditions and how changes in the underlying asset, volatility, interest rates, and time to maturity can affect option values.

The course goes beyond basic definitions and introduces important concepts such as option payoffs, profit and loss diagrams, hedging strategies, speculation, arbitrage, and risk management applications. Students will develop an understanding of commonly used strategies involving calls and puts and learn how these strategies can be applied to manage financial risks.

Special attention is given to concepts relevant to the FRM curriculum and GARP-oriented risk management learning, helping students connect theoretical concepts with practical financial-market applications. The course is structured to make complex options concepts easier to understand through clear explanations, examples, formulas, and practical interpretation.

Whether you are an FRM candidate, finance student, investment professional, risk-management aspirant, or someone interested in derivatives markets, this course will help you develop a solid foundation in the Options Market and understand why options are an essential component of modern financial risk management.

By the end of the course, you should have a clearer understanding of how options work, how their value is determined, how different strategies create different risk and return profiles, and how options can be incorporated into broader risk-management decisions.

Who this course is for:

Finance and business students looking to build a strong foundation in options markets.
Risk management professionals who want to understand how options are used for hedging and managing market risk.
FRM Part I and Part II candidates who want to strengthen their understanding of options and derivatives.
Traders and investment professionals who want to improve their understanding of option pricing, volatility, and risk.
Anyone interested in derivatives and financial markets, even without prior options-trading experience.