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Learn Call Options and Put Options - Introduction to Options

If you ever wanted to learn about Options and Options trading, but found it confusing, start with this awesome course
4.3 (59 ratings)
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951 students enrolled
Last updated 2/2013
English
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Includes:
  • 3.5 hours on-demand video
  • Full lifetime access
  • Access on mobile and TV
  • Certificate of Completion
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What Will I Learn?
Learn the basics of Options and Call Options
Understand the basic parameters of how Options work
Understand the differences between trading Stocks and Options
Key objective is to provide a strong foundation for continued learning in the more advanced topics in Options trading
Learn about In-the-Money, At-The-Money and Out-of-The-Money Options
What is Intrinsic value, Extrinsic Value and Time value
Differences between Buyers and Sellers of Options
Risk and Reward profile of Buyers and Sellers
Profit & Loss and Risk Graphs of different Options
Understand how Options are structured in financial markets using Apple (AAPL) Options as an example
All of the above applies to both Call Options (Section 1) and Put Options (Section 2).
View Curriculum
Requirements
  • Basic knowledge of financial markets
  • Some knowledge or experience with Stocks
Description

Section 1 is on Call Options

Most people learning Options for the first time face too much jargon and complex language. This course use real-world examples (buying a house) to explain how a Call Option (Section 1) works in real life. This example should make it absolutely clear what a Call Option is in step-by-step details. The course first defines what Options are, and in particular, what a Call Option is. It explains the differences between Option buyers and sellers, and the differences in their risk and reward profile. Several basic Options concepts like At-the-money, Out-of-the-money, and In-the-Money Options, and Risk Graphs are also introduced in this course. The profit and loss graphs for all three types of Options are explained in clear terms using AAPL Options.

Section 2 is on Put Options.

The Put Option is the ultimate "protector" of your portfolio, and in this course you can learn how Put Options work. It is the exact opposite of a Call Option. Put Options increase in value when the value of a stock or index drops in price. We define what a Put Option, and just like we did in the Call Option, we consider a real-world example of a Put Option. Fortunately, we have excellent examples of Put Options in real life - when we buy Insurance for our car or home, we are actually buying a Put Option. This example should make it absolutely clear what a Put Option is. The course looks at buyer and seller perspectives in a Put Option transaction, and analyzes the breakeven, and profit and loss profiles, all using the real world example first. Finally, just like the Call Option section, AAPL Options are studied in detail to understand how Put Options work.

The last lecture is a recap of the four basic Options strategies (Buying a Call, Selling a Call, Buying a Put, and Selling a Put). This part is usually challenging to newcomers, so this is explained in detail with tricks and tips on how to remember this instantly until you've become very familiar with all the four Options strategies.

Section 3 - Using Stock and Options combo strategies for stock investors.


In this section, three creative strategies are outlined for Stock investors to combine Options into their portfolio strategies.

  1. Use Options to buy Stock at prices that are far lower than what the stock is currently trading for
  2. Use Options to sell Stock at prices that are far higher than what it is currently trading for
  3. Use Options to hedge a Stock position that you already own
What you will master (Section 1 on Call Options)
  • The history of Options in the financial markets
  • The factors that affect Options pricing
  • The formal definition of Options and Call Options in particular
  • The Rights and Obligations of Option buyers and Option sellers
  • The fundamental differences between Stocks and Options
  • An excellent real estate example of a Call Option
  • What are At-the-money (ATM), Out-of-the-money (OTM) and In-the-money (ITM) Options
  • What is Intrinsic Value, Extrinsic Value and Time value in Options
  • The risk profile of buyers and sellers of Options
  • The advantages for the seller of an Option
  • How real Options are represented in the financial markets
  • Translate Options used in the real estate example to real AAPL Call Options on the trading platform
  • Explains the Option chain, the different Expiry series and the selection of the appropriate Call Option for a bullish strategy
  • How Option chains are laid out on a real platform
  • Detailed analysis of an Option seller's position
  • Demonstrate how the three types of Options work on AAPL Options
  • Profit and Loss graphs for buyers and sellers of AAPL Options



What you will master (Section 2 on Put Options)
  • Definition of a Put Option and its rights and obligations
  • Learn Put Options using a simple real-world example (Insurance)
  • What is a Put Option and how is it the opposite of a Call Option
  • Why is a Put Option the "ultimate protector" of your portfolio
  • A real world example of a Put Option we are all familiar with
  • How Put Options make money in bear markets
  • Buyer and seller perspectives of Put Options
  • Breakeven analysis and Profit and Loss graphs for buyers and sellers
  • Understand the layout of Put Options on the Thinkorswim platform
  • Compare real world Options to Options in the financial market
  • Study AAPL Put Options in detail
  • Profit & Loss graphs and risk profiles on the platform
  • The Seller's perspectives in a Put Option

In Section 3, you will master the art of combining Options strategies with Stocks. If you're already a Stock investor, you will learn to create consistent monthly income, as well as learn the ability of Options to protect your Stocks.


TOTAL COURSE LENGTH - OVER 3.5 HOURS

BONUS VIDEOS - 40 MINUTES

TOTAL - OVER 4 HOURS


This Course is the first 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 II - Options Foundation - Time Decay, Implied Volatility and Options Greeks will complete your theoretical understanding of Options.

Course III is Options strategies for Beginners - Buying Call Options and Put Options where we actually put live trades and manage them to their exit points.

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.

Please feel free to browse this page for a complete list of Testimonials from our clients, Blog readers and Linkedin group members.

Who is the target audience?
  • Anyone interested in learning Options trading
  • Anyone interested in using Options as a source of second income
  • anyone that intends to make Options trading as a source of long-term income
Students Who Viewed This Course Also Viewed
Curriculum For This Course
Expand All 23 Lectures Collapse All 23 Lectures 03:43:16
+
Introduction to Call Options
10 Lectures 01:53:41
Options as a financial instrument started trading in 1973 at the Chicago Board Options Exchange (CBOE). This instrument is purely conjured up from mathematics, which is an essential fact to always bear in mind. This lecture is a brief history of those developments starting from its earliest use in Greece in 300 B.C.
Preview 14:15

Options and Stocks have a very different risk and reward profile. This lecture addresses some of these differences. Please also view the supplementary video attached.
Stocks, Options, and Definitions of Options and a Call Option, Factors affecting Option Pricing
14:03

Most beginners have a hard time understanding Options because they are introduced with too much jargon. This simple real estate example will make it absolutely etch the concept of a Call option in your mind forever.
Understanding Call Options through a Real estate example
10:59

In any Option, there are three varieties - In-the-Money Options, At-the-Money Options and Out-of-the-money Options. The real estate example is extended to explain these concepts.
What are In-The-Money (ITM), At-The-Money (ATM) and Out-of-The-Money (OTM) Options
12:28

Risk Graphs are a critical component of all Options strategies. This is your starting point for understanding these critical tools.
Buyer and Seller risk profiles, Risk Graphs, Seller advantages, Expiry and Settlement
08:35

1) The buyer of a Call Option expects the price of the stock to go up 
Introduction to Call Options Quiz
4 questions

An Option chain and quote screen can be confusing to beginners. This lecture explains the screens in detail. This is the introduction to the Thinkorswim Options trading platform. Please also see the supplementary video on Option quotes and screens.
Option screens, Option Chains, Expiry series and Call Option Layout
14:40

Real Apple (AAPL) Options are studied and the concepts of ATM, ITM and OTM Options that were discussed in the real estate example are clearly explained using AAPL Options.
Choice of expiry series and ITM, ATM, OTM Options when choosing a Call Options
09:18

When looking at the Profit and Loss diagram for any Options strategy, you must understand there are two components to this graph - The first is the "real-time" picture which is the line in white, and the second is the situation on the day of the expiry of the Option. This is the red line. It's critical to understand how the white line collapses onto the red line as we approach expiry.
Call Option performance in real-time and on the day of expiry
07:38

All three varieties of Options - ATM, ITM, and OTM Options are plotted on a risk graph for Apple (AAPL) Options.
Risk Graphs of ITM, ATM and OTM Options
12:10

An Option seller is very different from an Option buyer. The risk and reward profile is very different from each other. This is unlike the stock market where the buyer and seller have similar but opposite profiles. In the Options world, the buyer and seller have symmetrical, opposite and unequal risk and reward profiles.
Option Sellers Risk profile
09:35
+
Introduction to Put Options
9 Lectures 01:16:09
Primer on Put Options and brief recap of the Call Option. The Put Options has some special characteristics that are different from Call Options. 
Put Options Primer
06:10

The formal definition of Put Options as well as the differences between a Call Option are explained.
Definition and characteristics of Put Options
09:12

Similar to the lecture on Call Options, Put Options are best explained with a real-world example. Fortunately, we have excellent examples of Put Options in real life - INSURANCE. When we buy insurance on our car or home, we're actually buying a Put Option. This is explained in simple language.
A real world example of Put Options - Buying Insurance
12:02

Risk graphs for Put Options are the symmetrical opposite of Call Options. Put Options also have one big difference from Call options when it comes to maximum profits for the buyer. This characteristic is explained.
Risks and Rewards in Put Options
05:23

Understanding the layout of a Put Option screen can be a bit challenging for newcomers. This lecture focuses on the layout for Put Options. If you're still confused after watching this lecture, this is normal. Watch how these Options move for a day or two and you'll figure it out.
Put Options quotes and screens on a Trading platform
08:01

The real-world Insurance example is extended to Apple (AAPL) Options on the Thinkorswim trading platform. ITM, ATM and OTM Options are explained in detail.
Risk Graphs for Put Options buyers
11:40

We will be repeating this aspect many times because its important. Options sellers are different from Option buyers. Option sellers are THE INSURANCE COMPANY. Their risks are much higher than Option buyers. You can see why this is the case.
Risk Graphs for Put Option sellers
06:47

This is a sneak peek into an advanced concept of Options spreads. If you're a seller of Options, you can control your risks and this lecture shows you how. It is normal if you don't fully understand this technique. Option spreads are covered in detail in a later course, but there is more to learn first.
Using Put Options Spreads to limit risk
08:44

We have a total of four basic Options strategies - We have a Call and a Put and you can buy or sell each of them. These 4 strategies make up the basic Options strategies. Two of these strategies are bullish and two are bearish. And to confuse things more, one bullish strategy uses Calls and one uses Puts. To easily understand or remember this complexity, we've created a 4-strategies Box. Also included is a video on how Options can be a much more capital-efficient instrument than Stocks. 
The four strategies BOX - Call and Put Options
08:10
+
Using Stock and Options combo strategies for Stock investors
4 Lectures 33:26
In this tactic, Put Options can be used effectively to buy stocks that you love at a price that you love even more. This is a very powerful strategy if you already invest into stocks, and you'd like to use Options to creatively buy your stocks.
Using Options to buy Stock at much lower prices than what its trading for
10:36

This is the reverse of the earlier tactic. If you already have stocks that are profitable, you can sell that stock at prices that are much higher than what the stock is currently trading for.
Using Options to sell Stock at much higher prices than what its trading for
07:29

You've heard me say that Put Options are the ultimate protector of stock you own. You can see how this is true by taking a real example.
Using Options to hedge Stock that you already own
10:51

Introduction to Options - Final
5 questions

This is a recap of the whole course. There are a few key points that I highlight in this concluding lecture that will be very helpful if you always remember them. For example, whenever you think of a Call Option, always think of the real estate example. And whenever you think of a Put Option, always think of the Insurance example. I hope you enjoyed this course and I look forward to seeing you on the next course on Time Decay, Implied Volatility and Option Greeks.
CONCLUSION
04:30
About the Instructor
4.4 Average rating
2,589 Reviews
26,854 Students
24 Courses
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, Hari has developed several proprietary Intellectual Property "methods and approaches" 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, mostly through trial and error. Trial and error in general, is an excellent method of learning, but applied in this context, trial and error CAN BE EXPENSIVE. My courseware focuses on this aspect mostly, so you can avoid losing money in the 1 to 2 years when you're learning. Yes, it does take that long, if not more. If the markets were indeed simple, you'd have everyone involved in it. Patience, Diligence, and Determination are what you need during this time.

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 truly understand how financial markets, and the various asset classes, trading nuances really work. Investing in the financial markets is no longer a HANDS-OFF ACTIVITY. There's no point blaming financial advisors after the fact. Now, it's become crucial for everyone to do "their OWN homework", so you can decide for yourself whether something is good or risky. This is of course easier said than done, and that's exactly where we come in.

My mission is to educate everyday people on the deep, strategic underpinnings of the stock markets, and exploit that knowledge with the use of OPTIONS.  THERE IS NOTHING RANDOM about the markets. There are surprises all the time, but there's always a method behind every madness. And my goal is to get you to this point of understanding and awareness. That's when it starts to fit in. 

Knowledge, Education, Crafting Breakthrough strategy, Technical analysis, Following Smart Money, Risk management, Disciplined Money management, and near flawless Execution approaches are just a few of the crucial points emphasized in all the Courses. Video-based education courseware, Practical workshops, several elite proprietary Advanced systems, a 4-week Live Mentoring program are just a few things we offer. The goal is to provide a "full circle" education in the Markets, which is necessary before it starts "fitting in". 

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

The Pluses

1. Options were invented out of thin air. And the people who invented them won Nobel Prizes for their invention (Fisher and Black). It is purely a "Mathematical" concept, with no real connections to the external world except for one, that's defined implicitly in its design.. Its fascinating, mathematical, strategic, risky, but can also provide the basis for life-long income streams. There's focus on Analysis, Data science, Statistical Modeling and Probability theory.

2. This gives rise 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. In many cases, you don't need to see what's going in the Markets, or the Stocks themselves. This data is embedded in the mathematical formulas that underpin Options structure itself, and you can operate on the basis of your Dashboard.

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 in the formulas and models used by these Nobel winners. And of course, sadly, if it were the case, the Nobel prizes would have to be retracted and we go back to the drawing board again. But today, several well developed markets around the world exist purely based on their Mathematical Modeling of RISK.

4. Options and Chess have LARGE overlaps. You may agree that Chess is a game of "skill". It's a game of Strategy and depends upon 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 principles. Why or How do we know this - The reason we know its a game of skill is : Try to play 100 chess games with Kasparov or Anand. Normal people are almost guaranteed a loss in all 100 games. So it has to be a game of skill. And why do we know its underlying features are mathematics based. The fact that a computer like Deep Blue beat the GrandMaster Garry Kasparov in 1997, proved to be both shocking, and revealing at the same time. While human beings abilities have not increased in exponential terms during the last 20 years, and we may be able to plan 3 or 4 or 5 moves ahead, the computer of today can calculate a 1000 moves ahead, go down every possible path, and record the outcomes like photographic memory.  This is a capability that humans may never achieve, proving that Math plays a key role. So today, every professional Chess player refuses to play the machine, because it's almost guaranteed that the Masters WILL LOSE EVERY GAME

5. Lastly, You MUST believe this completely -  Options, just like Chess, are a "skill set", and requires acquiring a deep set of analytical skills much more so than most skill sets in the world, and THEY can only be MASTERED over a period of time. Once you understand Options better, you'll realize how true this is. We cannot turn into a Kasparov in a matter of weeks or even a few months. It does NOT work like that. But once you go through this process that can go for 1 to 2 years or more (depending upon your commitment to this process), there is a very powerful light at the end of this tunnel. You build a skill set for life.  Age, Geographical location, Lifestyles, or Weather are no longer a barrier to creating consistent income streams, regardless of who you are, where you are, or how old you are. 

This is very POWERFUL stuff. 

Now let's look at the negatives. This is what most people will NOT tell you. Anyone that tells you Options are SIMPLE, and you can make extra ordinary income easily, is JUST NOT TRUE. I will tell you Options can be brutal if you simply apply speculative methodologies. Then you should just STICK TO STOCKS, which are nothing BUT speculation, with a minute role in STRATEGY Give yourself time to master this CRAFT. And once you can develop a SYSTEMATIC approach to every situation (which is the Real Game), you'll be well on your way to consistent performance.


MINUSES


Options are easily the most fascinating financial instrument with several upside benefits, but also an equally powerful set of negatives. 

1. Options have a steep learning curve. Don't expect to become Kasparov in a couple of months. Or even a year or two. 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 of experience, in performing their "legal duty" of providing liquidity. While we have hours to plan our attack, the Market Maker literally has a few seconds. In a normal  day, a market maker can do many thousands of trades. One can only be in awe of their skills. 

2. If you're interested in Options, try NOT approach it with a mindset or requirement of making money. This is not only NOT going to happen, but its a recipe for disaster. It's like a student of Medicine wanting to practice their skills after 2 months of study. To develop a meaningful batting average, you will need Time, Patience, and Perseverance. They don't develop overnight. Focus completely on the learning, ideally practicing on paper money accounts because you WILL LOSE at first. 

3) As someone that has self-learnt Options and through making mistakes from Trial and Error, 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 (too much) money

Having said that, if you can get past the first 12 months and acquire the expertise in a Systematic manner with Systematic approaches to every situation, 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 income month after month. 

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

Watch my Free Mini-courses or my YouTube channel , all of which have the highest quality education in Options as well as Financial Markets.. 

And join me in my UDemy courses, where I share cutting-edge theoretical knowledge mixed with practical insights, strategy and impeccable execution approaches, through live trading examples. How do we know it's all this (don't just go by my word). Check what 25,000 students have to say in 2100 Reviews, with almost 2000 of them being 5-Star or 4-Star

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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