Option Basics:
-Options are contracts
-You pay a premium for them
-You are able to buy or sell stock
-1 option = 100 shares
-They expire the third Friday of the month you purchase them for
-Strike price = expiration price
-You pay a premium
-The option gets traded and sold versus the stock
-Most people just trade the contracts
Example:
-Think of options like buying a house
-You find a house that you like in an area where the houses are selling for $150k. You knock on the door and ask to buy the house. You are willing to give $10k up front if the house is sold to you within 6 months for $200k.
-It is a win-win situation.
-The homeowner gets the $10k and you get the option to purchase the house in the future and you can do research to check if the area is actually developing.
-You have the right, but not the obligation to purchase the house. You pay $10k in order to have the option to buy it.
-If someone gave the homeowner a higher bid, the homeowner would not be able to sell the house because you have the legal right to buy it in the future for $200k.
-The homeowner would have to buy out the contract with you before selling the house for $300k.
Types of Options:
1. Call – You are expecting the stock to go up
2. Put – You are expecting the stock to go down
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This video gave me a head start to trade with Aman Natt, he is the best of all traders I have come across. My first trade was $12,850
Two videos of you that i liked and actually understood the concept.
Subscribed… keep up the good work 🙂
3:09 the best non verbal gestures
Thank you.
The scariest part about trading options is getting assigned the stock.
You’re so helpful! Thank you so much!
JUST A QUICK QUESTION
IN OPTIONS IS MY PROFIT CALCULATED ON BASIS OF PREMIUM OR STOCK PRICE???
this is very informative, as I am learning this stuff now. I have to admit though, I have a hard time focusing when the title on your board doesn't spell the word Basics correctly. Thank you for the information though.
This is what i have been looking for at 3:38 I thought i would have to buy the shares in the contract. I didn't realise that i could sell the contract on for profit.
Quick question. Why would someone buy a PUT option from me if the stock price is going down? Do they feel that the stock price will eventually go back up? If that's the case, would they be buying it as a CALL option? I'm learning, sorry
what if the value of the house go below $200,000. Lets say, $150,000, i could ignore the my call option and only pay $150,000 for it?
Perfect Sasha, Great Analogy used!
have you done you class on how to put on a trade and how to get out of the trade yet?
When selling an option what happens if the buyer exercises their right to buy 100 shares of stock and it is more than the seller has?
So much easier to understand!
Did no one notice that basics is misspelled in the title? LOL
If the hypothetical "house" was going at $300,000. And my Call was at $200,000. Could wouldn't it be a smart
investment to buy it at $200,000 and then turn around and sell it at $300,000 for a $100,000 profit?
because of this video – i finally understand this!
Let`s say i bought 100 shares of Stock 'A' for $100 on the 1st of January. I also bought 1 contract of the Call option for the same Stock 'A' at $100. So, how different is it for the option when the value of the stock reaches $200? Don't I still make the same money i'd have made from buying the stock? Besides, doesn't options trading require more margin than stock trading? Do options offer higher leverage than stocks, as only the premium is at risk?
Hi Sasha! Thank you again, so informative! What is the difference between shorting and buying a put (or should i say "selling" a put while "buying" a call?)? One question as well an option has an expiry date, you say on the third friday of the month, is that always the case regardless of when i make the order? If i make a call at 100 when it trades at 50 and 1 week before the expiry date it is at 110 what is my profit for 100 shares? => 1000$. Finally, when shorting a stock lets say at 50 and I see it is now at 20 can there ever be a problem for me to get out of my trade at that moment when I want to cash in? Thanks a million!
Im looking for a video that explain the very very basics, for very beginners.
All ive seen so far is confusing for now =/
I now know how to trade options
Appreciate the video Sasha! Thanks!
is contract going to be given back for what he gave seller 10k?
Some really good stuff Sasha. Thanks!
Dear Sasha. I like how you explain everything, thank you! Since I am starting from the basic is there a chronological number of lesson to follow? like 1/23 ..2/23 3/23 etc..
Basics. Not baiscs.
thanks, for the reply and info!
just one question, is it the same for every country in investing?
Thank you for these great videos. Great, for beginners to learn!
Your videos really helped me to get better at stock trading and investment. Thank you so much!
kinda confused lol
Love your videos! thank you please keep posting more