Options Trading Essentials: The ULTIMATE Guides

In this lesson, you'll FINALLY learn what implied volatility represents in a clearly explained manner.

The VIX Index is a widely watched indicator, as it gauges demand for market protection. In this lesson, you'll learn exactly what the VIX Index is, and how it relates to the S&P 500.

With options, you can estimate the probability of a stock's future price movements. In this lesson, you'll learn about the "expected move" and how it can be calculated manually (though it often doesn't need to be).

In this lesson, you'll learn about the most important concepts related to VIX options. After this lecture, you'll be able to navigate VIX options substantially better than most.

The implied volatility of a stock does not tell you the whole story, as that current IV could be high or low relative to that stock's "normal" level of implied volatility. In this lesson, you'll learn about two metrics that help you determine if a stock's IV is relatively high or low.

Option prices have many exposures, with changes in the stock price being one of them. In this lesson, you'll learn about delta, the option Greek that quantifies an option's risk relative to changes in the underlying stock price.

An option's directional risk exposure is not static. When the stock price changes, so does an option's delta. Gamma is the option Greek that quantifies how much an option's delta is expected to change when the stock price shifts.

At the time of an option's expiration date, its price will only consist of intrinsic value. This means that as time passes, all of an option's extrinsic value will wither away. Theta is the option Greek that quantifies how much an option's price is expected to lose with each passing day.

Implied volatility represents the overall price level of a stock's options. An option's vega represents how much an option's price is expected to change relative to each 1% change in implied volatility.

While an option's delta tells you the expected price change of that option when the stock price moves, position delta tells you how much money you stand to make or lose when the stock price changes.

Delta hedging is the practice of reducing a position's directional risk exposure by adding positions that bring a position's delta exposure closer to zero. In this video, you'll learn about how delta hedging works (the general idea).

The gamma of an option tells you how much the option's delta is expected to change when the stock price moves. However, understanding gamma on a position level is very important, as your position's gamma indicates how long or short (bullish or bearish) your position will become when the stock price changes.