Level 1: FOUNDATION

Lesson 1: Market Basics

OK, we start easy. What’s a stock. What’s a stock market. Who are the key figures and entities. What are the differences AND similarities between trading and gambling. The bid and the ask. How is money made. How is it lost. Why do most people lose money. What are derivatives. What is there OTHER than stock.

Lesson 2: Option Basics

The way the Option Basics should be presented. Why options. What is an option. Calls and Puts – Long and Short. Rights and Obligations. Exercise and Assignment. Real (Intrinsic) value and Time (Extrinsic) value. The option chain. Rolling up and down the chain. Expiration – the process. Briefly cover volatility and Time Decay.

Lesson 3: Technical Analysis

I know what you’re thinking. Most option professionals don’t care for TA unless they’re trying to sell you TA software! However, the underlying concepts are so simple and the demand for the subject matter is so large that it is nearly impossible to create a basic course that does not talk about it. So for what it’s worth, this lesson will serve as a survey of support, resistance, patterns, moving averages, etc… and address the question of why people think this stuff works. Some of you may prefer to skip this lesson altogether.

Lesson 4: Married Puts and Collars

It’s about time we got back to actual options. Here we introduce your first option strategies. Since most people who are new to options tend to be stock traders, we thought it would be best if we started with an option strategy that requires stock. In fact, the Married Put and the Collar are the techniques that option traders use to protect their stock holdings! We will cover construction, scenarios, and basic position adjustments.

Lesson 5: Long (Debit) Vertical Spreads

In the previous lesson, you learned to make use of long and short options in a position. We now take the concept of multiple options one step deeper as we do away with the stock component. We will explain long vertical spreads – both call spreads and put spreads. Given the difficulty level of this lesson, we will move the topic of short vertical spreads to the next lesson.

Lesson 6: Short (Credit) Vertical Spreads, Probability, and Risk/Reward Ratios

We continue our coverage of Vertical Spreads. After that, we have what is probably the most important lesson of the course, yet the least talked about in typical seminar. Why? Because Probability and Risk/Reward ratios are inversely related. People tend to highlight the one that they need to sell you their strategy. The truth is, you need to know BOTH in every trade.

Lesson 7: Butterflies and Condors

Now that you are comfortable with positions containing multiple options, butterflies and condors are the natural extensions of vertical spreads. These strategies can be used for both directional and non-directional trading. We end the lesson by introducing the very popular Iron Condor strategy.

Lesson 8: The Option Greeks

Delta, Gamma, Theta, Vega, and Rho. Every option student wants to learn them and the mystery surrounding them. This lesson will define, explain, and teach you when and why traders look at the option greeks. By the end of the lesson, you’ll wonder what all the mystery was about!

Lesson 9: Volatility

Did you know that there are two types of volatility? Historical and Implied. We will define and explain both types and give you some insight into how volatility impacts the option marketplace. We will also cover how traders use volatility levels to decide what kind of option strategies to place.

Lesson 10: Straddles and Strangles

So you think the market is about to make a big move but you are not sure of the direction? That is precisely what straddles and strangles are for. In this session, we cover the risks and potential benefits of these trades.

Lesson 11: Time Spreads (Calendar Spreads)

Up until now, every strategy that we have talked about can be done using options that span one expiration period. The time spread is the first strategy that spans TWO time periods, hence they are often referred to as “calendar” spreads. We will explore the use of this strategy for both directional and non-directional trades.

Lesson 12: Risk Management

Finally, all the best strategies in the world amount to very little without the use of proper risk management. Remember, trading is one of those few jobs where you can go to work and come home with LESS money than you went to work with! This session helps suggest some approaches to addressing trading losses. It also makes a strong case for how to properly address trading profits – this last part is not as elementary as people think it is!

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