Options Essentials

An introduction to essential options covering practical usage of options and important option related topics.

This lesson will explain open interest, how it is calculated and how this information can provide useful insights into liquidity, price movements, and demand of an option and play an important role as part of an investor's overall research and understanding of trading options.

Hedging is one of the most popular uses of equity options. Options can be used to hedge an individual stock position or an entire portfolio. This lesson discusses both using options as a hedge for equity positions as well as hedging options with equity.

Options allow a trader to potentially take in greater profit on less capital than trading the underlying. Conversely options may experience greater loss or a greater chance of loss depending on the strategy used.

When trading options investors must be aware of expiration dates when the options expire. The holder of an option has the right to the underlying position when they exercise, and the seller will have the obligation for the underlying positions when they are assigned. All investors should be aware of the exercise and assignment process

There are several well-defined multi-leg option strategies, otherwise known as spreads. Each strategy has its own particular risk and rewards and investors will trade a specific strategy based on predictions they have on the price of the underlying. This course covers six of the most popular strategies.

Options can be used to generate income through several strategies, two of the most popular are covered calls and cash-secured puts. In this lesson we will discuss how each of those strategies work, the benefits, and risks of each strategy.