Using The Greeks To Understand Options
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Trading options without a grasp of the Greeks is like to attempting to fly a plane without the ability to read instruments.
Unfortunately, many traders have never heard of the Greeks, yet they invest in options nevertheless. This puts them at danger later, just like a pilot would if they were flying in poor weather without instruments. This course will teach you how to trade options correctly. You will be able to make excellent trades after knowing about Delta, Gamma, Theta, and Vega. You’ll be able to simply modify transactions that aren’t performing as intended (option repairs). Based on the daily time decay (theta), you will be able to determine if staying in the transaction is a good or poor idea. What could be better than knowing how to minimize costs while increasing profits?
The delta of an option will also inform you how likely it is (statistically) to be in the money. In other words, the options market provides answers to any query you could possibly have. If a stock is priced at $50 per share. Then, with the click of a mouse, you can determine how likely it is that the stock will be at 45/share, 50/share, or 55/share in the following month! It blew my head when I first realized what experienced traders knew! When taking an option position or developing an options strategy, the following considerations will introduce risk and reward:
Price variation (delta)
Volatility fluctuations (vega)
Time lapse (theta)
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