Ep 106 : Basic Guide to Trading Options
★ SUMMARY ★
Ep 106: The basic guide to trading options
You might wonder, why would somebody want to trade options?
The main reason is because when you look at a stock, there’s really only two ways that you can trade it and make money from it. You can either buy it to the upside (go long), or buy it to the downside (go short).
However, when it comes to trading options, you have much more flexibility, because there are many ways and strategies to make money, as well as many risk management opportunities available for you, as you learn how the business works.
Options are fairly complicated, there’s a lot of things involved in them that you need to understand in order to trade them successfully.
Options are priced based on three different aspects, time (when they expire), volatility and intrinsic value.
Something else you have to understand about options is the risks related to them, these risks are known as the Greeks, and they are five: Delta, Gamma, Theta, Vega and Rho.
In this video, I’m going to break things down for you on paper and I’ll give you some basic guidelines on how to get started on the options business.
We’ll cover the difference between trading stocks and trading options. I’ll show you some of the different ways that you can set up positions to make money with options, such as verticals, calendars, iron condor, etc.
Also, we’ll talk about buying and selling options contracts, calls and puts, we’ll take a look at a basic trade grid, I’ll go in depth on the risks related to options, and finally you’ll see how everything comes together with some real life examples.
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