Options Fundamentals

This is where I post all of the videos for the Options Fundamentals Series. I did this series in early 2019 over 17 weeks to cover the basics of options trading. I start with an explanation of options, then talk about the “Greeks” of options, I talk about common options spreads, adjusting positions, and finally wrap it all up with using all of this knowledge to build a trading plan. The goal of this series is to help folks with the basics so that you understand the jargon and, hopefully, it will make the other series more understandable. Feel free to reach out with any questions on these videos. I tried to keep them to 20 minutes or less so they aren’t comprehensive by any means, but I hope they can help start discussions of options trading.

Of course, all of these videos are available on my Bitchute Channel for streaming but if you want to download high definition versions of the videos and have your copy of the slides, they are available here

Ep. 1: Introduction to Options

This is the episode that started it all. I assume no knowledge of the options world and start with the basics. What is an option? What is a call, a put? What is “the money”? How are options valued? These are the very basics you need to understand what options traders are saying.

Download the Video

Download the Slides

Ep 2: Simple Options Plays

Before digging into the theory, I decided to show two simple options plays that are very common for beginners because they are tied to buying and selling stock. A covered call and a cash secured put are two ways to generate income while entering and exiting a stock position. You can combine the two strategies to “ladder” in and out of a stock position. I think these are good first steps into what options can do for a portfolio.

Download the Video

Download the Slides

Ep 3: Volatility

This episode explains one of the least understood concepts in options trading: volatility. I cover historical volatility vs implied volatility and how to use each of them. I talk about how volatility moves around big events like earnings and how you can use volatility to predict when these events will happen. I also cover how the “expected move” around earnings is calculated.

Download the Video

Download the Slides

Ep 4: Demystifying the Greeks: Delta

In this episode I introduce the “Greeks” of options trading and describe delta which measure price risk. I cover the formal as well as the informal definitions of delta and how traders use them. I also discuss the idea of positional delta for multi-legged trades.

Download the Video

Download the Slides

Ep 5: Demystifying the Greeks: Gamma

In this episode I introduce the Greek called gamma and how it related to delta. I discuss how gamma moves and how traders use it to measure price risk along with delta. I also discuss the idea of “Gamma Week” and the increased price risk at that time in the life of a trade.

Download the Video

Download the Slides

Ep 6: Demystifying the Greeks: Theta

In this episode I introduce the Greek called theta which measures time decay of an option. I talk about how time decay works in theory and how traders use it to build trades that make money over time.

Download the Video

Download the Slides

Ep 7: Demystifying the Greeks: Vega

In this episode I introduce the Greek called vega which measures volatility risk. I talk about how vega works and how trades use vega to set up trades to take advantage of possible moves in volatility.

Download the Video

Download the Slides

Ep 8: Demystifying the Greeks: Rho and Wrap Up

In this final episode of the Demystifying the Greeks I briefly discuss Rho and when Rho would matter to a trader. I then summarize the Greeks and discuss how using the Greeks can help a trader set up a plan for successful trading.

Download the Video

Download the Slides

Ep 9: Why Spreads?

Now that the Greeks are done, I talk about why options traders like to trade spreads vs single options. I discuss the advantages and disadvantages of doing spreads including risk vs reward of each type of trading. This was one of the most popular episodes in the series so I hope you find it interesting.

Download the Video

Download the Slides

Ep 10: Butterflies

In this episode I start discussing types of spreads by talking about butterflies. I talk about what a butterfly is, the Greeks of a butterfly and different ways to set up a butterfly (ATM, OTM, Regular vs Iron).

Download the Video

Download the Slides

Ep 11: Iron Condors

In this episode I discuss Iron Condors: What are they? The Greeks of an IC. When to use them. as well as go over some example in the lab

Download the Video

Download the Slides

Ep 12: Ratio Spreads

In this episode I close out my discussion of vertical spreads with a discussions of ratio spreads. I talk a little bit about front spreads (mostly to show why I don’t trade them) but then talk about back spreads: when to trade them, and why they are interesting trade for certain market conditions.

Download the Video

Download the Slides

Ep 13: Calendars

One of my favorite spreads when volatility is low is the calendar. So in this episode I describe what a calendar is, how it makes money, as well as other forms of it such as the double calendar. It’s a nice positive vega trade that has served me well..

Download the Video

Download the Slides

Ep 14: Diagonals

Continuing the discussion of time spreads, I cover diagonals in this episode. I talk about what is a diagonal, how they make money, when to use them as well as using a diagonal a less expensive replacement for a covered call.

Download the Video

Download the Slides

Ep 15: Double Diagonals

Rounding out my discussion of time spreads, I cover double diagonals in this episode. As with the other spreads I talk about what it is, how it makes money, and when to use it. I think of it like a positive vega version of an Iron Condor. Diagonals (single or double) can be very flexible with respect to vega exposure so it’s important to understand what they are and how they work.

Download the Video

Download the Slides

Ep 16: Adjustments

Now that the major spread types are covered, I talk about adjusting positions. What is an adjustment? Why to adjust? Should you adjust? I also cover common types of adjustments. I then talk about my “Pets vs Cattle” analogy with respect to sticking with trades. Definitely worth a watch.

Download the Video

Download the Slides

Ep 17: Putting it All Together

In the final episode of the series I summarize the major points of the past 16 episodes and bring it all together and talk about building a trade plan. The whole course is about understanding how options work so that you can build a trading plan that works for you. I talk about a version of the plan I was using at the time as an example.

Download the Video

Download the Slides