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
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Instructed by Hari Swaminathan Business / Finance
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  • Lectures 23
  • Length 3.5 hours
  • Skill Level Beginner 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 2/2013 English

Course 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.

What are the requirements?

  • Basic knowledge of financial markets
  • Some knowledge or experience with Stocks

What am I going to get from this course?

  • 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).

What 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

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: Introduction to Call Options
14:15
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.
14:03
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.
10:59
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.
12:28
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.
08:35
Risk Graphs are a critical component of all Options strategies. This is your starting point for understanding these critical tools.
4 questions
1) The buyer of a Call Option expects the price of the stock to go up 
14:40
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.
09:18
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.
07:38
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.
12:10
All three varieties of Options - ATM, ITM, and OTM Options are plotted on a risk graph for Apple (AAPL) Options.
09:35
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.
Section 2: Introduction to Put Options
06:10
Primer on Put Options and brief recap of the Call Option. The Put Options has some special characteristics that are different from Call Options. 
09:12
The formal definition of Put Options as well as the differences between a Call Option are explained.
12:02
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.
05:23
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.
08:01
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.
11:40
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.
06:47
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.
08:44
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.
08:10
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. 
Section 3: Using Stock and Options combo strategies for Stock investors
10:36
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.
07:29
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.
10:51
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.
5 questions
04:30
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.

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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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