The Basics
    • 16 Jul 2024
    • 1 Minute to read
    • Dark
    • PDF

    The Basics

    • Dark
    • PDF

    Article summary

    Session 1: The Basics covers a detailed introduction to options trading, focusing on the fundamentals of options such as the impact of time, strike prices, and how options are valued. It provides a thorough explanation using metaphors, like the concept of buying a safe with unknown contents, to illustrate how options pricing works.

    Session 1: The Basics

    Topics Covered in this session:

    1. Buying a Safe: A Thought Experiment to Understand Options
    2. Buying a Stock for a certain price, by a certain time: Understanding Calls
    3. Time is Money: The effect of time on the value of an option
    4. Where to Strike: Moneyness and understanding the right to buy a stock at different values
    5. The value of a call: Summarizing the pieces of a call’s value
    6. Trading Plans: Reasons to buy a call
    7. Flip Side: Selling a call
    8. Put a Ceiling on your Stock: Covered Calls
    9. Stock Insurance: Puts Part 1
    10. Shorting with fixed downside: Puts Part 2
    11. Getting paid for your stock buy-limit order : Puts Part 3
    12. Summary: The components of an option’s value, Calls vs Puts

    Video Transcript

    Was this article helpful?