Learn/Options
7 lessons
7 published
Options
An option is a contract with rules. Once the payoff is drawn and the greeks are understood as rates of change, most of the mystery disappears.
- 01 Read the payoff before the priceMaximum loss, maximum gain and breakeven, in one picture.
- 02 What you are paying forIntrinsic and time value, separated properly.
- 03 Delta, in plain languageHow much the option moves when the underlying moves.
- 04 Theta and the shape of decayWhy the last week behaves nothing like the first.
- 05 Vega and implied volatilityThe part that moves your option when price does not.
- 06 Vertical spreadsCapping both ends on purpose, and what it costs.
- 07 Expiry day mechanicsSettlement, exercise and what actually happens at the close.