Day 2 Flashcards
How do we select expiration Date?
How do we select strikes to trade?
opening and closing trades
Exercise defined deeper
assignment defined deeper
exercise/assignment of a call
exercise/assignment of a put
when to buy/sell options
4 position review
break even price for calls/puts
position graphs
Position graph3 considerations
how to calculate intrinsic value for call / put
if intrinsic value is NEGATIVE, then out of the money, and intrinsic value will be 0CALL : STOCK PRICE - STRIKE PRICEPUT: STRIKE PRICE - STOCK PRICE
long put graph direction
right to left
long call graph direction
left to right
long position risk/reward
limited risk, unlimited reward
short position risk/reward
risk is unlimited, reward is limited
breakeven calculation for PUT
Strike - premium = breakeven
breakeven calculation for Call
Strike + Premium = breakeven
Protecting stock
protects against gapswhen add put to a long stock position, the risk becomes like a “call” meaning, the loss is limited.aka Married Put
Protecting stock strategy
Protecting stock strategy 2
Stock at a Discount
Stock at a Discount Strategy Pt 1
Stock at a Discount Strategy Pt 2
only do with ETF index because stocks can become worthless. but ETF indexes can not
renting a stock or covered calls
renting a stock strategy pt 1
renting a stock strategy pt 2
Free protection pt 1
Free protection pt 2
Free protection strategy pt 1
Free protection strategy pt 2
mimicing stock
use when you can’t short an actual stock- buying a call and selling a put that share the same strike creates the same effect as holding the stock long- buying a put and selling a call that share the same strike creates the same effect as holding the stock short- even though this strategy mimics the stocks, dividends would not be paid nor received since options do not convey ownership of the underlying- buy a call and sell a putor- buy a put and sell a call
mimicing stock strategy
moneyness review
ITM Call Example
OTM Call example
ITM Puts Example
OTM Puts Example
Understanding Time Value
2 different types of Volatility
Inflated vs Deflated Volatility pt 1
Inflated vs Deflated Volatility pt 2
volatility interpretation
historical volatility
implied volatility
implied volatility determines strategy
inflated vs deflated optionsdo we buy or sell:deflated optionsinflated options
how to figure out if inflated or deflated volatility
How to know if Volatility is deflated
How to know if Volatility is Inflated
How to know if Volatility is Fair
volatility measurement and methodology pt 1
volatility measurement and methodology pt 2
purpose of greeks with options
greek letter meaning
Delta
Delta for calls
Call Delta VS underlying Price
Delta for Puts
put delta vs underlying price
interpretation of delta
hard deltas vs soft deltas
Delta Effect pt 1Call/put delta impact on premium
Delta Effect pt 2delta as a measure of expiring ITM
Delta Effect pt 3Delta for Hedging Purposes
directional trading
anchor unit
single leg strategies
very deflated single leg strategieslong call (debit / bullish)
very deflated single leg strategieslong call (debit / bullish)action and maintenance
very deflated single leg strategieslong call (debit / bullish)graph example
very deflated single leg strategieslong call (debit / bullish)data example
roll
sell option that you bought and buy new one that has more longer experation
evolve
Very Deflated Single Leg strategiesLong Put (Debit/Bearish)
Very Deflated Single Leg strategiesLong Put (Debit/Bearish)action and maintenance
Very Deflated Single Leg strategiesLong Put (Debit/Bearish)Graph
Very Deflated Single Leg strategiesLong Put (Debit/Bearish)Data
