Introduction to Options

New to options? In this video we introduce you to call and put options and walk through the basic use of a call. You will learn how to compare buying a stock to buying a call option. And we also advance to a call spread to illustrate how to better manage risk.

The credit spread involves two option legs, but results in an investor getting paid a premium to take on a limited amount of risk.

Understand how prices of puts and calls are inextricably linked to each other and the price of the underlying stock through an equation known as “Put/Call Parity”. Learn the importance of how dividends and interest rates affect underlying stocks when implementing options strategies.

Learn why prices of some options are more or less responsive to changes in the value of the underlying security. Define each of the ‘Greek’ variables (Delta, Gamma, Theta, Vega, Rho); using an interactive options calculator. Understand the factors that influence the price of an option over time, including days to expiration, interest rates, and the proximity between the option strike price and the price of the underlying.