Hey, this is Sasha, and welcome to another episode of let’s talk stocks, episode number 106, the basic guide to understanding options.
We’re just going to cover some basics regarding options if you’ve never traded options contracts. We’ll talk about some options; maybe it will give you a little bit of foundation.
Before we get into that, I want to remind you that everything that we cover, discuss or talk about is just for educational and informational purposes, nothing is recommendations to buy or sell any stock, option or equity. I think most of you guys know that, but I want to emphasize that, because you might be watching this video sometime in the future and prices might have shifted.
You might be wondering, why exactly am I talking about options today? Or why are we doing a let’s talk stocks session about an essential guide to options?
My Options Course
Some of you that have been following me for quite some time now and understand that I’ve been working on an options course for quite a while, in fact, this course is huge, I don’t even want to say how many hours, but you almost have to be very educationally determined to watch the course. And that is just because options are a very complex subject.
With that being said, our second course is being released, and the first one is already released. It’s the options foundation course, which is a three-hour course that we already have on the website.
But the next course in the series, the second course for the business of options and trading verticals, where we go in more depth, is going to be released probably within two to three weeks. Once the sales page is done and we finish uploading some of the things and double checking a couple of things, it’s going to be released very soon and very quickly. It’s nearly there, 99% complete, so we have to fine-tune a few things.
Because of that, because the course is so massive, I’ve broken up the whole mastery course series into nine courses, only because to watch the entire mastery course, it probably is about 80-90 hours long.
For this second course that we have coming out, I’ve been working on it for quite a while, and if you take a look here on the Vimeo uploads that we already have, we have about 35 videos as you can see, and it’s already 18 hours long. So it’s double the size of my technical analysis course, and this one will not be in DVD format, it’s just way too big to handle all those DVDs and the quality, the resolution and so forth.
But we’ve uploaded a lot of videos, and we’ll be uploading more and more videos to the other courses over the next couple of weeks. So we will probably release the other courses every three weeks, maybe four weeks, once a month, we’ll probably release the next course, it’s just going to be uploading, checking the study guide and posting the sales page. Because we finished filming everything, 95% of it is all finished filming, and it’s just double checking things.
But when we look at this, and we look at these modules, there’s a lot of modules in here, and we go in depth into the course into every little segment or detail. If you look at this basic module, which is module 7, this module as you can see we do things on paper, we take a look, and we break things down, the business behind trading options.
I go in detail about basically every little step behind trading options for the business of trading options and the verticals in this course.
We talk about growing as a trader, long-term profit potential, the dangers of buying single contracts, so if you break things down, again, we look at it, and some of them are on paper, some of them are going to be on screen, and there’s a combination of things as you go through the videos.
That way you get to have some on-screen experience, but you also get to see things kind of like in a classroom. So as we look at things on paper here, and you go through it, you can see that as you get into selling verticals, you can convert them into an iron condor. I break things down in quite a bit of detail, and that’s why the course is exceptionally long.
If you’re dedicated to trading options, you’ll probably want to take a look at these courses that we’ll be releasing periodically as things are being launched.
Why would you trade options?
With that being said and with that in mind, my goal really in today’s lesson of let’s talk stocks, is to go into some basic concepts behind options. And you might be wondering, why is it, or why would you, or why would somebody want to trade options?
When you’re looking at a stock, there’s really only two ways you can trade it, you can buy it to the upside, or sell it, or short it in other words. So you can go to the upside or the downside.
When it comes to trading options, you have much more flexibility, because they expire with time. There’s time premium involved, so similar to how an insurance company sells you premium every single month, such as a health care company or an Auto-insurance Company, over time they collect that free money time and time again. If you happen to get into an accident or something happens, they have to pay out. But this is the core of the options business as well.
You can go ahead and sell premium. You can go ahead and sell contracts and your core as far as some problem areas where you might have is the price, because options are based on the price. So if the stock doesn’t go in your favor, or the equity doesn’t go in your favor, then you’re going to have a slight loss, but also, since you have that time decay, it can help offset those things.
There’s much more flexibility when it comes to options
There’s a lot of flexibility when it comes to trading options because you have a lot more risk management opportunities for you as you learn the options business.
To break things down, I want to take a look at some things on paper. So that way you can get an idea and see what’s going on and what’s happening behind options, and give you some basic guidelines to getting you started as you start evolving as a trader and evolving into getting more inside of trading options.
Basics of options
On a general level, when we look at a stock, you have two ways that you can trade a stock. When we look at stock here, you have upside direction that you can trade a stock or downside direction, so you can either go long, or you can go short.
Those are just binary ways, and you can go long or short, that’s the only way you can trade stock if you’re buying shares.
When it comes to trading options, there’s a lot of different flexibility, in fact, a virtually unlimited amount of flexibilities, but I’ll give you some insights to different ways that you can set up positions.
This is a profit picture of an extended opportunity for a stock, meaning if the stock goes up one dollar you make money. And if you short, it works out this way, if you’re short, the stock goes down, you end up making money, so it works in that directions.
When it comes to trading options, what you can do is create a lot of various positions. When we look at options, here’s one of the basic strategies, like a vertical that we’ve talked about in that course, the options course.
What you can do here is, as you position the price on this vertical, because it’s based on strike prices, so this strike price might be 170 and this strike price might be 160, so you’re buying one and selling one, and now what you can do is you can, depending on where the price is of the stock is, if it’s over here, now you need that stock price to get over into this area and that would be your profitable area. If it doesn’t get into that area, then you’re at a losing scenario or losing situation.
If we’re looking at the price, this part would be the loss, and then your winning side would be over here. So you need the price to get above that 170. That’s just a basic concept of a vertical.
The cool thing about options
Here is the cool part behind it. Really the thing that has a significant advantage behind options, is that you can actually set this vertical up to be more like this, where if you have this vertical and your current price is right here, you can actually, if the stock stands still you make money due to time decay and value, because options decay, just like insurance premium.
Or if it moves up, you make money, and if it moves down a little bit to that 170 level, then you also make money up to the 170 points. If you get to the 160 this is the loss.
But basically, this is how you would go about looking at these different profit pictures because there are a lot of variations to trading options.
Here is what else you can do with options if you look at buying a contract and selling a contract. One is in the first month, and one is on the next month. You’re protecting yourself, you can create positions such as calendars, so it gives you these tippy positions, where you can position the price somewhere over here or over here, depending on where you want it. Even over here.
Let’s say you position the price somewhere on this level, and now you can allow that stock to move freely between, let’s say 120 and 190. And with time there’s this expiration curve that happens because options decay, this expiration timeframe graph continues to rise higher and higher and if the stock stays kind of between these areas, you can get out of that position, somewhere over there, even if you hold it for one day, one hour, you can hold it for a week or even a whole month, all the way up until near expiration, and then get out of that position, but it really creates a lot of flexibility.
That’s another variation or strategy. And there’s going to be a lot of other variations and strategies when it comes to options. When you look at it, you have those verticals that we talked about earlier, so you have one vertical that’s here, and then what you can do is create a second vertical on the other side, and now this creates your iron condor.
On this side, you would have your call vertical, and this would be your put vertical. Again, the concept is the same, and you’re allowing time to decay and expire because this line right here, this curvature line is your current line.
The lines that I’m drawing are the lines at expiration, so as this continues to rise even if it’s over here and the price is there, it’ll continue to rise and get higher and then you can be right there at that profitable point.
It allows you to be flexible when it comes to creating strategies and risk management profiles and skewing things. You can even do skew.
Getting creative with risk management
For example if you believe there’s more upside, you could stack contracts on this side, so you can do five times on this side whereas one time on this side, so that would mean, if I did askew, let’s just say I make this one more significant, and then this side would be only minimal. You’re capping just up here at this price point.
It allows you to limit the risk on the upside, so it will enable you to be creative. You can see the distance here, between the range over here is much different. It allows you to structure things in various ways and get creative to managing that risk on hand.
Let’s take a look at a basic trade grid when it comes to options. If you’re looking at basic calls and puts, these are the two types of vehicles that you can trade, you can trade calls, or you could trade puts.
Typically when you look at a trading program, you’ll see calls on one side, and you’ll see puts probably on the other side.
In the middle over here, what you might see is something like this, it’ll be the strike prices, so you’ll have 120, you might have 130, it’ll just continue going down, and these are only the different strike prices, and these can be really long, it just really depends.
It depends on the position, on the vehicle that you’re trading, so these are your strike prices. These are the contracts that you can choose to buy or sell. It’s kind of like picking out which person you want to ensure. If you believe the stock price at 150, 170, do you want to play at the 130?
Calls and Puts
The key question is then, what are the puts or the calls? If you’re looking at the calls. Here on this side, you might have a bid and an ask. And I’m just going to put one number down for Simplicity sake, but let’s say you have some dollar figure over here, these are only the prices. As you go in here, they’re just different prices and different values.
And the same thing on the put side. As you go in the put side, again, you have a bid, and an ask on these different prices. And they’re going to be different prices depending on a lot of different things, depending on how options are priced, which is a couple of ways.
The three ways options are priced
Options are basically priced, number one due to when they expire, so if this is December and we’ll say it’s 40 days away, 40 days until expiration, and then you have another one that’s January, which for conversation sake, let’s say it’s 70 days until expiration. And then you’ll have the same trade grid basically, then the prices would be much more because there’s much time built into the January premium. There’s more time value.
The other thing that options are priced on is, we have the time, we have the volatility, and we have the intrinsic value.
These are the three things. The time is just how far out you buy. The volatility is how violent those stocks move for the volatility in the market, and the intrinsic values are if they’re worth anything. This is what most people know, and most people understand when it comes to trading options.
If I look here and our current price for the stock let’s say is 153. Anything on the call side that’s in this area is technically in the money. Because they’re worth something, they have intrinsic value at expiration. So that’s technically in the money.
And then if we go on the put side, everything over here, bellow or technically above that 153, the 160 and so forth is considered in the money. That is basically because these are worth something at expiration.
How people trade
You might be wondering why those things are worth anything? Well, you have to remember the basic concept of how people trade.
When it comes to options, you have two things that you can do. What can you do with those options? You can buy them, or the other approach is, you can sell them. Most people know about buying them. They have a difficulty understanding the selling side.
If you’re looking to sell the options already, for many people, it gets confusing, so they look at just buying option contracts. This is where their focus lies.
But really you could also sell the options, just like you could sell a stock, and when we break things down, you have two main ways but then four combinations.
Long side vs. short side
If you look at the long side, and then you look at the short side, the selling side. You have the calls over here, and then the puts right here.
When you look at it this way, when you are long a call, you’re typical, again, we’re talking single positions, you’re looking for that stock to increase. When you are long a put, remember if you buy a put, most people are insuring it to put that stock to someone else.
Because a put gives you the right to sell the stock at that higher price, that’s why people buy the put. Why do people buy the calls? Well, because it gives them the right to buy at that price, so again, based on those strike prices.
If you’re short, or in other words, if you’re selling the contracts, this is our sell side, which many people do not understand. But you can sell the options and in this case, in this scenario, if you’re selling the call, that looks a little bit the other way. If you’re selling the call, you’re looking for that stock to go down, because now you’re obligated to sell it at that price.
And if you’re selling the put, you’re going the other way, so you’re going to the upside, when you sell puts, you’re looking for an appreciation and higher value.
The profit Picture
How does this look on a profit picture? What does it look like? Well, in general, I’m going to show you, when you’re long a call, you’re going to see something along the lines of this. That’s kind of the profit picture that it looks like.
When you’re long a put, you’ve probably seen it, and it’s the other way. You’re looking for downside movement. You can see, this way you want the stock to go down, because you’re profitable on the upside, on the calls you’re profitable to this side, to the upside.
On the puts, you’re profitable on the downside, based on the pictures. And that is based on, and if you look at it, this would be the price. If you see this being the price, and over here and down, this would be the profit that you make. Again, you’re looking at that picture in that way. So as price moves left to right, you’re making or losing money.
On the short side, it works a little bit opposite or different. On the short side, what you have is an extension, if you’re having a hard time, you have the opposite effect on these calls and puts.
If you draw kind of the opposite effect from that corner or that APEX, that’s how it works. If we bring it on the short side, because if we’re looking to sell a call, we want it to go down, so what does it look like? It looks like this. You draw it like this, and there’s your profit picture.
Again, this is still the price, so as price moves down, you make money. As for price moves to the upside, you lose money, and as you can see here in a second, this is unlimited risk. This is unlimited profit, and this is an unlimited loss.
That’s why a lot of people don’t like shorting or selling option premium because they don’t understand the risks, and that can be the dangers. But if you know and understand the risks, they can be really powerful.
What about the selling a put? What does that look like? Well, again, you just kind of draw that little APEX from that area and move it over, so you’re looking at things like that. It’s going to look basically like that.
This one, the way you make money is if the stock moves to the upside, or if the stock stands still really, that’s another way, but you’re looking to make money to the upside, but if it goes down you lose, and you have unlimited loss potential, up until zero. The stock isn’t going to go beyond zero.
In general, the main thing to learn here is the different combinations so that you can go long or short and you can have the calls and the pus, and now you have variations of those strategies.
And the way that they operate and work is based on the Greeks, and the Greeks are something that affects the stock prices, those are the risks that you have so that you can see here there is a risk that has unlimited loss up until zero. This is known as price risk or delta risk. Let’s take a look at some of those risks.
There are a couple of different risks when it comes to options. Simple terms they are known by the Greeks, but similar to how you have a car dashboard, the gas gauge, you have the radio, you see the volume indicator, and there are different indicators for you to drive.
And in options we have a few of those indicators, which is the delta, you have the gamma, you also have the theta, the Vega, and then you also have the Rho. Rho is usually not one that many people think about, and it’s related to interest rates. It’s not something that we worry too much about as option traders. So don’t stress about rho too much. The other ones are much more important.
When it comes to these risks that you have, basically you have delta risks. So when you buy a stock and it’s going to the upside, if you have let’s say 20 shares and the stock goes up to $1, you make $20. This is known as basically the delta, for every $1 move in the stock, that’s what you make. With options it’s the same kind of concept, the delta is referring to the price risk.
If we look back on our other example, as we look at these different charts and profit pictures, you can see the price risk is to the upside or the downside.
And it depends on how many contracts you have and also the spread that you’re doing, but it’s price risk. As for price moves, that’s a risk. The more contracts you have, the larger the delta is going to be.
Gamma refers to the change in delta. If you had a Gamma of 5 and a delta of let’s say 20, if that stock moved up $1 in the next level of that price, your delta would basically be 25, so your delta would change.
Gamma tells you the rate of change of delta. That’s the speed, but these are the price risks. Delta is more important to focus on at the moment if you’re just getting started, gamma is just telling you the speed of change of that delta.
The theta is going to be the time risk or the time value risk. When you look at the time value, we know that options decay. If you’re a seller of options over time, that value is going continue to increase because you’re decaying in your options.
If you’re buying an individual option like let’s say you’re buying a long option contract. Eventually, here’s our current line, that line right there is going to get closer and closer to the black line because it ultimately expires. Options eventually expire. With time, it gets closer and closer.
If you have, let’s say a negative 50 in theta, that means every day you lose $50. Then the next day that line will drop to somewhere over here, then the next day it drops lower. And this is of course exponential, so it doesn’t go by fives or by tens all the time.
Exponential I’m talking about not linear, like this. Exponential means it’s a slow decay, and then it’ll go quicker. The falloff is much faster.
It’s imperative you pay close attention to that, because the closer you get to expiration, the faster it goes, and the faster it decays, which is great if you’re a seller of premium, but bad if you’re a buyer of options.
And then Vega, it comes down to the volatility risk. Volatility is a tough thing to understand and explain, but understand that the more volatile a stock is, or equity, the more volatility that’s priced in.
Depending if you’re a positive or a contrary volatility position is going to depend on how it affects your position.
For this basic lesson that I’m just sharing with you right now, I don’t have enough time to go into the Vega, because it’s quite confusing. Only because I just shot a video with this about doing it within the course, and it took me about an hour to explain the Vega, just to make sure people have it down, but in general the Vega refers to volatility risk, and what I can tell you is that if you are losing money in options, and the delta, the gamma, the theta all look correct, but you’re still losing money, chances are it’s because you don’t understand the Vega.
That’s a whole other section and more complicated segment regarding options, but understand that the other risk that you have is that Vega.
And the final risk is the rho, which refers to interest rates, but it’s not a big of a deal, because those fluctuate very minimally according to a year to year, so it just depends on the interest rate environment.
Here to give you some on-screen practice regarding options and regarding some of the things we just discussed, you can see here we have a basic trade grid or evaluation of an option chain, regarding the options of Amazon.
Looking at it right here, you can see this is amazon right there, that’s the ticker symbol that I put in, and then you have the calls on the left, the puts on the right, and these are the strike prices right here in the middle, as you look to the left, these are the dates.
We have the November options, which are 36 days out. You have 64 days remaining for the December option so that you could trade either the 36 or the 64. Then there are other things in here, which are weekly options, which you can see, which are the nonstandard ones but you can still also trade those. Then you also have the February in 2017, which are 127 days out.
That’s a necessary option kind of trade grid or option chain, and this is what it looks like. Over here on the right, you have some volatility that’s being played out and that you can see. Also, I’ve marked it right there in the column, which also has the implied volatility. And you have that both on the calls and puts.
If you’re looking to let’s say buy an option contract, the way that you would do this if you’re looking at it and you check amazons price. If we look at the price right now, the last price is let’s say $829, so that’s our previous price.
What I can do is, if I’m interested in an upside thing or an upside move in the stock, I could only just go ahead and buy an option contract, which is here if I bought at the 870 or the 840, buying it allows me to have the right but not the obligation to get that stock at the strike price that I choose.
Get the knowledge before trading options
For many people, they don’t want to deal with the stock itself, so instead they would trade options, they use it as leverage, I don’t recommend it too much, using it as far as leverage, until you know and understand what you’re doing. But looking at it right here, what you can do is chose your strike price and then evaluate it.
Before we get there, I do want to point things out, you can see things right here are in purple, these are in the money and in the put side these are in the money, because when you trade a put, and you buy a put, it gives you the right to put that stock at that price. That means, if you have a put at the 850, you can put that stock to somebody at the 850.
In general, here’s what happens. Most people, the way they trade it is, if they buy 100 shares of Amazon, analyze the trade, here’s our profit picture for that trade right there.
You can see as that stock heads higher, you make money, you can see here you have a delta, gamma, and theta. Our delta right here is 100, gamma is nothing, theta nothing, Vega nothing, because if you’re trading a simple stock, which right here we are, then you will not have gamma, theta, and Vega, because that’s for options.
But as we go up to $1, since we have 100 shares. Then you make $100. That’s how stocks are traded, regarding the delta.
An option contract controls 100 shares
When it comes to option contracts, it’s essential that you remember each one of these contracts controls 100 shares.
On a basic example for a person who owns 100 shares of Amazon and wants to protect that stock, let’s say the stock is heading lower. What they could do is buy a single option contract right here, and this one contract will help offset that 100 shares. Because look at what this does and creates.
When you look at this profit picture, and you start evaluating it, you can see that in this profit picture, if I go down to just the stock, I can go down to losing a lot of money.
But if I buy this put option, you can see that my loss right there would be limited to $6135 and that is based on the strike price of $785 that I have.
If I go to $800, I can get a little closer, but I’m paying more for that. What you see now is you can see the risks that are involved. Here’s our risk, you have a theta of -42, which means we lose $42 every day. You have a Vega of 97, the delta of 65.
What we did here when we added the contract is we reduced our delta, so we make less on the upside, but we kill or knock off our risk to the downside.
But we also lose or pay $42 every time, as time moves forward, which here is my time box, as I move that time box forward, you can see that white line, which is the current line, gets closer and closer to expiration.
If that stock doesn’t move, I’m going to be at a loss, just because I’m paying for this single option contract, if you look at it, is just like buying a put, if you look at it I’m paying $2140. You can see that number right over here.
That’s what I’m paying, that’s my loss right there at that price point because my zero line is right there. This is my zero line, that’s my profit. Profit and loss are in this axis, and these are my strike prices over here.
If that price it moves down, it’s good for this option, but it’s terrible for the stock, but that’s why by doing this, it hedges your portfolio, or it hedges your position, that’s why people buy these things to go ahead and offset their potential losses usually.
For many people, when they trade options, they don’t’ care about this owning the stock, they will just trade the option on its own. What you can do is buy the put. If you think the stock is going down, you can buy the put, but of course, you have this negative theta.
You could also go ahead and if we go back, and we do the 36 days, and we go, and we buy the call, you can do the same thing to the upside. If you analyze the trade, you go to the risk profile, and now I have a call that I’ve analyzed, you can see now, I’m going to the upside.
Now I’m making money to the upside, but if it stands still, I’m losing money, because again, I have a negative theta.
And of course I could structure this out or move it over to the 860, I could go to the 875, and then you put up less capital, but still, you’re losing money every day.
The flip side to this is people who sell option premium. If I go ahead and sell a call, you can see how it’s an unlimited risk over here, which makes it dangerous, but the advantage to this, if the stock stands still, you make money. If it goes down, you make money. If it goes up a little bit, you still make money.
I could go ahead and adjust this to 880, and now my statistical probabilities go up. Now I make a little bit less because nobody is going to give you anything in the market, but my chance of winning increases. And you can do the same thing on the put side.
Here I’m selling a put, If I go to let’s say 765, there I am selling a put, and you can see if the stock stands still if it goes up I make money, and if it goes down a little bit, I make money. If it goes too far down there, I lose quite a bit of money.
That’s why for many people they offset this with a vertical. If we’re selling, let’s say the 760, I might go ahead and also buy the 700 which is the vertical we talked about before, and you can see how this gets really converted, so now I go ahead and cap my max losses right here, and this is how many people trade options.
You go ahead, and you set up a vertical, and now if the stock stands still, you make money, if it goes up, you make money, if it goes down a little bit, you make money. If It goes past this breaking point right here, you start losing money at expiration, because remember, this green line is at expiration. Your current line is that white line. So it’s important you keep those things in line.
But you can see that because your statistical probabilities increase, the stock can stand still, it can go up, or it can go down up to about this point, your chance of success has gone up, but you can see that you’re only making this much when you compare it to the risk that you have is this much. And that is just because your chance of winning has increased.
If you go ahead and adjust this, and you can say, ok well I’ll buy a vertical instead of on the call side. Which you can also do, which will look the same, because we sold it on the put side, but if I buy a vertical here, now what you can see is, and I can even go a little farther out, let’s say for example purposes.
You can see that my risk is about this much, my potential gain is this much, so you could see it’s almost a 60/40.
However, my price is right here. When your price is right here, that means if the stock stands still, since you’re at a negative theta. If the stock stands still, you lose money on a day to day basis. If it goes up, you do make money, and you make money after it clears that break-even point. But if it stands still or if it goes to the downside you lose money.
Here is a cool thing to keep in check. If you’re actually looking for upside exposure and you look at the theta right here, you’re only at $1.61, and you’re at the 830 level, so you need the stock to get to about 850-860.
When you compare this to making a single trade, and we go to let’s say the 860, and we buy o single, and you analyze this trade, you can see that you need it to get into the 870. You need it to get to the 870 levels, and your theta decay, if you look at it, your theta decay right here is $43 per day.
By just doing a single option contract, you’re losing a lot on a per day basis, so instead, it’s always good to sell that other one on the upside. Because at least you’re making some money. Yes, it’s hopeful and beautiful if that stock explodes to the upside and you earn $25000, but chances are, a stock like Amazon that’s already trading at the $830 level, even if it gets to $930 within the next month, that’s pretty good.
For you to daydream about the $1200 level, it’s more than likely the chance of it happening, be real, it’s probably unlikely to happen in the next 30 days. The statistical probability is just unlikely, so that’s why we really do like a vertical, and if you’re really hopeful, you can shift this and go to let’s say the 870, and now that will give you a little more upside room and expansion, and the reason you can tell that is also due to this delta.
You can see the delta here is 11, and if you bring it back instead of the 870, we go to the 860, you can see now on a per dollar move, you’re only making 6.95. You’re making more on a per dollar move when you increase and spread out those strike prices.
Of course, you could increase the contracts. If you increase the contracts, you can see I can bump up my delta, which means now if that stock goes up, let’s say a dollar, take a look, if we increase it by a dollar, let’s offset it. Right now we’re at zero.
We’re at -$3.60, our delta is 48, so think about it, if I increase this by $1 right now, watch what happens to this profit and loss picture over here.
What I’m going to do is increase this dollar figure, it’s going to jump the strike price right here, which will affect this line. And this line will move by a dollar over here, and you’ll see the profit and loss changing.
Watch what happens here, and you can see that the profit and loss will change by that $48.64. I’ll go ahead, hit enter and there you go. You can see how it’s at $45 because we were at -$3 or so, and now you can see that we made $45.
That’s really how that delta works. And of course your theta is your time value, and the Vega is the volatility, which is a little more complicated beyond the scope of this video.
Hopefully, this makes a little bit more sense now, as far as just a basic guideline to trading options. As you can see, options are fairly complicated, there’s a lot of things involved in them, but I hope this gave you a handful of foundational concepts, this is still just touching the surface, there are much more foundational concepts to learn, but maybe it just gave you a few more insights to just some basics behind looking at options and trading options and indeed the way the big picture of things really work when trading options.