Options Trading for Beginners: Calls, Puts & Income

What is a Put Option and how can we conceptualize it when we apply it to an everyday situation such as the price of a Troy ounce of Gold?

What would happen if we introduce an Options Market where puts can also be bought and sold and not only exercised?

Using a Put Option to protect against the decline in price of an existing asset

Mapping of all the components of a Put Option to what we find in our Options Trading platform

In this lesson you will learn about stocks, what they are, what they represent, how their price is determined and how they are traded in the public markets.

We will also review key concepts such as equity, debt, sales, earnings, dividends, stock exchange, ticker symbol, outstanding shares and market capitalization among others.

If you have traded Stocks before, this lesson will provide an overview as to how Options can be used in the market

Options and Stocks have some similarities but also some major differences. In this lesson we explore both to better understand how Options relate to Stocks

Traders refer to where the underlying price with respect to an option's strike price as being At-the-Money (ATM), In-the-Money (ITM) or Out-of-the-Money (OTM). We explore what these terms mean and why they are important to understand

Options are made up of two components: Intrinsic and Extrinsic value. We will learn what they mean and the factors that drive their value

What are the factors that determine an Option's Price? Although option prices are determined by supply and demand in the market, their fair value can be estimated based on several factors such as Type, Strike Price, Underlying Price, Time to Expiration,  Implied Volatility, Dividends and Risk-free Interest Rates. We explore their importance and their impact on the price of both Calls and Puts

Liquidity is crucial when it comes to options trading and a key factor in an options strategy's profitability. In this lesson we see what liquidity is and how we can estimate it when we trade options

Complete analysis and breakdown of liquidity factors for options using real market examples

A thorough look at the exercise and assignment process and how it can potentially affect our options trading strategies

Volatility is a key concept when it comes to options trading and one which newcomers and stock traders alike struggle to make sense of. In this lesson we look at the concept of Volatility and its importance in Option Pricing.

Differences between Historical and Implied Volatility and their impact on Option Pricing

Practical application of Implied Volatility in determining potential underlying price ranges.

It can be overwhelming to see all the different types of Volatility: what they are, what they measure and their importance in practical options trading. In this lesson we analyze Historical Volatility, Realized Volatility, IV per Strike, IV expiration and IVx

It can be overwhelming to see all the different types of Volatility: what they are, what they measure and their importance in practical options trading. In this lesson we analyze IVRank, IVPercentile, VIX and we look at a summary of the most important Volatility measures that we can encounter when we trade Options

Volatility skew is a measure of how different IV is for different strikes of options with the same expiration. This has a major impact on Option Pricing and can affect the options strategies we select. In this lesson we look at Volatility Skew and its impact on Options Trading

Delta is a measure of the directional exposure of an option or options' position. In this lesson we analyze how it behaves with respect to the Underlying Price. We also look at how delta behaves for both Calls and Puts as well as the differences between OTM, ATM and ITM Options

Delta is a measure of the directional exposure of an option or options' position. In this lesson we analyze how it behaves with respect to different Strike Prices. We also look at how delta behaves for both Calls and Puts as well as the differences between OTM, ATM and ITM Options along with real examples on the trading platform

Theta is a measure of time decay for an Option. In this lesson we look at how it affects both Calls and Puts and also how it is reflected in an Option's Intrinsic and Extrinsic value. We also look at formulas used to estimate theta and how theta itself behaves differently as time passes for OTM, ITM and ATM Options

Real examples of Theta and its behavior on the Options Trading platform

Gamma is a measure of acceleration of profits for an Option. In this lesson we look at how it affects both Calls and Puts and also how it is reflected in long and short options positions. We also look at formulas used to estimate gamma and how gamma itself behaves differently as time passes for OTM, ITM and ATM Options

Gamma and Theta are closely related since theta is the price a trader has to pay to have positive gamma and conversely negative gamma is the risk a trader has to assume when having positive theta. In this lesson we explore this relationship as well as the impact of Gamma in daily P/L reflected in the Delta-Gamma approximation

Real examples of Gamma and its behavior on the Options Trading platform

Vega is a measure of exposure to changes in Implied Volatility for an Option. In this lesson we look at how it affects both Calls and Puts and also how it is reflected in long and short options positions. We also look at formulas used to estimate Vega and how Vega itself behaves differently as time passes for OTM, ITM and ATM Options

Real examples of Vega and its behavior on the Options Trading platform

How to read and interpret the Risk Profile graphs that will be used when analyzing Options Strategies