Options Tutorial: From Beginner to Practical (Fundamentals, Trading Strategies, Hands-On Skills)
Options are an extremely useful trading and investment tool, especially in times of market volatility. It has the effect of scaling back shares and enhancing profits. However, the description of stocks has become more complex, leading many new hands to start generating thoughts as they understand the fundamentals of options.
In order to help people understand options and the College of Trade Options, we will introduce the key points of Stock Stocks Options Trading Options in this article. The full text is long, but we recommend that you familiarize yourself with this knowledge before trading options.
What are options
An option is a contract between buy and sell.
To put it simply: Buy and sell a coin to exchange, to acquire the rights to the Symbol Asset Assets that are traded on or before a specified date to Buy or Sell Options contracts. In order to acquire a coin, it may be necessary to contract the liability of Symbol Asset Assets for the purchase or sale of a set price on or before the specified date.
5 key elements of options
There are five important factors for each option contract in China, namely: Assets Related to the Contract, Option Type, Authority Price, Option Money and Due Date.
You need to know this information in detail before trading options each time.
Contract-Related Assets: Contracted Standard Assets for options are the option to buy and sell related Assets in a Bi-Contracted Trade, including Stocks, Indices, Forex, Commodity, etc., when options are exercised.
Option Type: Options are divided into Look Up Options (Call) and Put Options (Put). Put options give the buyer the right to Buy the symbol of the contract. Put options give the buyer the right to Sell contract symbols.
Authority Price: The price of Asset Assets for the purchase of options to buy bidirectional Trade related symbols.
Options money: The price of options contracts in the market, and options purchases are directed towards the cost of the option sale.
Due date: The date on which the options contract is due. If the option purchase is not exercised before the due date, the option money will be lost. However, Buy or Sell options and then do not have to be the same after and do not need to be the same as futures options, you can choose to trade before the date, before closing or losing.
Options are divided into US options and Euro options in that: holders of US options can exercise on or before the date, but holders of European options can only exercise on the current day of the date. You can be thereFUYUI BEEF CATTLEGo to the tool options page to see the option types.
For example, this option is a Put option symbolized by Apple (AAPL)Options(PUT) dated April 19, 2024, option price 177.50, (PUT), dated April 19, 2024, option price is 177.50, option gold is 4.40.
Extended Reading:【Trade option options are based on these 5 key points】
options strategystrategy: The meaning of Call Put Option
4 options based strategy/Single Option strategystrategy
By option type, Look at Bullish options (Call Option) and Put Options (Put Option), plus (Put Option), plus Trade options towards Buy and Sell and Sell. 4 Basics can be made up of 4 Basics, which can be made up of 4 basic strategic strategies (called single or one-sided strategy) (referred to as one-sided or one-party strategy):
Buy Bullish options (Long Call Option)
Sell/hold bullish options (Short Call Option)
Buy View Put Options(Long Put Option)
Sell/Short Put Option (Short Put Option)
We can see the rights or obligations associated with Buy and Sell option options, as well as the 4 applicable rights or obligations, and the 4 applicable scenarios of the strategy:
Extended Reading:【4 options basic strategy】
If you want more options for system learning, you can watch the video for free:【3 options useful features for reading options at the door】
Factors affecting options pricing
It is not because of the risk of taking, that is, of closing the difference in buying and selling, and options money is an important factor.
For options trading, option money is the cost required to be paid. For options trading, option money is the maximum profit that can be obtained at the moment.
Typically, when we see a stock's price trend ahead of a stock, we can choose to Buy Bullish options (Call), and if Bearish shares are not moving, we can choose to Buy Bearish Put options (PUT). If, in practice, there is no reason to see the price of bullish options (Call) before the actual increase in the share price occurs, why?
This is why it is necessary to understand the implications of the options price (option gold). The options price is based on the value and time price groups.
Intrinsic Value
The high value of the options is related to the correct stock price information of the symbol. To put it simply, after buying bullish options (Call), the symbol shows an upward trend in the share price, the internal value of the bullish options (Call) will reflect the increase, and the current downward trend in the stock price will decrease, and the internal value of bullish options (Call) will decrease.
There are three types of relationship between options exercise price and common share price:
ITM (In-the-Money Option): Put option (Call) below the current share price or Put option (Put) above the correct share price;
OTM (Out-of-the-Money Option): Option for a bullish option above the current share price (Call), or a Put option below the right share price, or an option under a bearish option (PUT);
At-the-Money Option: Options with an execution price equal to the stock price.
You have options, where options are enforceable at the price. Therefore, the price of OTMs is usually lower than in-price options and higher relative to risks and returns.
When we are doing practical exercises, it is usually usedOptions Chain。 Options Chain is a feature that can filter options based on option type, by date, and by option price. Through the Options Chain, we can clearly see the variation in options prices in relation to different options prices.
As shown in the picture, the left side is the Bullish Options (Call Option), and the right side is the Put Options (Put Option). The black bow line in the middle indicates the current price of the symbol.
The options in the blue image area in the figure belong to the ITM (In-the-Money Option), while the rest are attributed to the OTM (Out-of-the-Money Option). We can clearly see the options price changes.
Time Value
The time value reflects the depreciating value of the options contract ahead of time. If you are a Buyer of options, it is important to note that the time value of the options is lost depending on the date. After placing Buy options, the symbol of the symbol does not change at all times, the stock price of the symbol does not change from time to time, and the options price will shrink from time to time.
In Options Chain (Options Chain), we can clearly see that the price is not an OTM option, and the options price is low close to the date.
It is important to note that close to the date, the price of options will fluctuate, and the risks will increase accordingly. The current due option is called the closing day option. These options are extremely sensitive to the price changes of the symbol, and the risk is usually high in the event of a hurricane.
If you are new to the risk, you can choose options that are far from the date, such as those within 1-3 months.
Apart from this, there are a number of other factors that affect the price of options, such as the IV wave. If you want to know more, you can read:【What is the change in the price of options to the bottom?】
Option Price Calculator OptionPriceCalCalculator Quick Calculate Option Price Calculation Options Option Price
You may ask, how does it make sense to know the current price of options? Won't Buy After Heavy Fall? And the option price calculator OptionPriceCalCalculator looks at the difference between the current price and the theoretical price of options by visiting the option price, which is a good tool to analyze the price now! UseFUYUI BEEF CATTLE, Grab every Options Trading Opportunity!
How to Trade Stocks Options | OptionStrading
If you are a new hand, you can start with the Symbol Stock Stocks of your choice of options.
For example, if you want to Trade Apple (AAPL) Options, you can search Apple or AAPL in the Fatubull app, select Apple or AAPL in the lower left corner, select “Apple or AAPL” in the lower left corner, select “Options” in the lower left corner, go to “, Enter the Term Chain OptionsChain page.
In the Options Chain, select by date and option price, double-click on the options to enter the option's Quote page, and trade is now available.
How to Trade Futures with TradeOptions
1. Before trading options, you must first open a securities account Account. Open new customers for a limited period of time and receive $2,188 in bonuses!
2. If you would like to learn more about the detailed steps, analysis features and considerations of US Stock Options Trading, you can learn for free:options for entrance teaching
Extended Reading:Fees for US stock options，Fees for Hong Kong stock options，Futu Options Services
Other common options strategystrategy
In addition to the 4 fundamental strategies, different option prices or options with different directions can be combined to combine more complex strategies for different trading purposes.
1. Covered Stock Strategy Covered Call
Covered CallIt is a strategic strategy made up of a combination of Hold Positions Stock Stocks and Options and Options. This strategy is applicable to stocks, but anticipates short-term declines in stock prices, hoping for a risk outlook through options.
For example, if Judy owns 100 shares, it is expected that the stock may have some volatility in the near term, and it is possible to use the Covered Call strategy to mitigate the risks of falling stock prices, and this is what it can do:
In the Futubull app, go to the Details page for Hold Positions, left-click on the “Options” section to enter the Options Chain.
Select the Bullish direction; choose an expiration date, such as April 5; and choose a line option price, such as 530.
Click on the corresponding option, a window will appear at the bottom of the page, select the trade direction “Sell”, and pay attention to the balance of the options and click “Trade”.
Set Sell Price and Quantity (Hold 100 shares, up to 1 option can be sold).
As shown below, Judy sold at a price of 6.05 on the day, sold on April 1, 5, with an option price of $530, and could receive an income of USD 605 after the order was placed.
If, before the option due date, the A Stock price rises above the exercise price of $530, then options buyers may need to exercise, and Judy will sell 100 Shares for the required Underwriting Obligation, and Sell 100 Shares at $530. However, the upside of the share price is likely to lead to a rebound in Judy.
If the share price does not rise above $530, then Judy can stabilize the options money of $605, in a certain way, against the risk of a drop in the price of Hold Positions.
Extended Reading:Will the stock market move to retail currency? 【Options strategyinsurance is profitable]
2. Open Put Options Short Put
How does a famous investor use the options strategy strategy? Many people will dream of sharing with Buffet's classic example:
Bauffitt has been buying Coca-Cola since 1988. In April 1993, in recognition of the high share price of Coca-Cola, he sold 5 million shares of Coca-Cola with an operating price of $35 to consider Put Options (PUT). After selling options, Buffett has now made $7.5 million in options money.
In this case, if Coca-Cola is allowed to breach the option price of $35 prior to the option due date, the options sold by Mr. Buffett will become ITM (In-the-Money Option), where the option's Buy option allows you to buy a lot of stocks at a lower price. Conversely, if Coca-Cola's share price does not fall below $35, the options are subject to OTM (Out-of-the-Money Option). Options will not be exercised, for example, Buffett may receive US$7.5 million of Sell Option options.
It is not safe to buy stocks at low prices, but it is good for Buffett to explain that this strategy is starting to make Short Put (Put out Put options). This strategy is not only applicable to Institutions, but to ordinary investors.
Short PutThe strategy is used to Sell Put options at an acceptable risk price at the exercise price, expecting a lower price to continue to rally, while holding a Bullish company over a long period of time. If you do not have the right stock, the higher the risk and the higher the collateral requirements are required if you do not have the right shares, the higher the risk involved, and the higher the collateral requirements.
3. Long Straddle Combination Long Straddle
A classic strategy can be used if the outcome of a major event related to the entire stock market or stock market is difficult to predict when the market or stock price will follow.Long Straddle。 To carry out this strategy, it is necessary to buy the same Stock Stocks of the two symbols, the same execution price, the same bullish view on the same date, the same position on the same price, the same bullish options on the same date, the same bullish options on the same date, the same bullish options on the same date as the options (call) and the options (call).
With Jerry's prediction that Tesla will make a big news in the near future, the news is expected to create a big wave in the stock price in the short term, and if we don't accept the share price increase, you can quickly build a Long Straddle combination through Futubull's compositional strategy function:
Enter Tesla's Options Chain and select the strategy for a combination of cards at the bottom of the page.
Select a due date, for example, April 19 and select an option price, for example 177.5; Trade option to select “Buy”.
Swipe up the bottom pane to see the loss chart of the Buy and options combinations for this subsequent combination.
Click Trade to buy Bullish and Put Options in the selection at the same time.
>> The design images displayed on the screen are for illustrative purposes only and do not constitute any investment advice or guarantee.
Based on the balance sheet and the loss pattern, we can see that Jerry's options combination will make a profit if the stock price is between 156.5~198.5~198.5, when the price of the stock is between 156.5~198.5, when the price of Jerry's options is placed before the option due date, when the stock price is above or below 156.5. Life loss, the maximum loss is expected to cost $2078 for the Buy Combination.
If you want to know more about saddle combinations, you can click:[Benefit from Long Straddle Combination]
More options advanced combination strategy free courses:【Senior portfolio options strategy】
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Practical tip: Calculate stock price fluctuations with options futures
During Earnings Reports, the stock market typically experiences high volatility, which can provide traders with dipping trading opportunities. So, how do we know the extent of a Stock's rise or fall after Earnings Reports? Investors or Traders can use a tool called Forecast Oscillation to make Earnings Reports.
Expected move (Expected move) is calculated based on the current options price, resulting in a subsequent rise in Stocks.
By analyzing futures fluctuations, investors or traders can explore the options market to predict price changes for stocks or ETFs over a period of time. This can help traders identify trading opportunities and manage risks, especially in major events such as Earnings Reports, Publishers of Economic Indicators or FDA announcements.
The simplest way to calculate the forward swing is to use the average Long Straddle, where the price of a combination of options is 85%.
In simple terms, it is important to calculate the expected volatility of stocks in the Earnings Reports week, you can try the following steps:
Select the first options date after the company publishes Earnings Reports.
Find the Options Chain and see the price of the Average option compare the price of the Bullish options with the average price of the Put options to the price of the options, and get the price of the options combination of options in the Bearish option combination.
Then the value rises by 85% to reach the expected volatility, which is the extent to which Stocks can fluctuate. You can subtract the results from the current price of the stock to get a percentage of the stock's expected volatility.
But it is worth noting that the calculation of expected volatility is only the expected volatility of the stock price, and the direction is uncertain. That is, the share price may rise or fall.
Options wave analysis Is the option to break overvalue/undervalue
IV AMPLITUDEIt is the volatility derived from the options market price rebound that reflects the expectations of market investors for future stock price movements. For example, IV is not Historical Data, it is the market's predictive value. High IV indicates that the market recognizes that Asset Prices are likely to fluctuate significantly (e.g. before the release of Earnings Reports and after policy events). IV is high, stock prices do not move higher, options prices and options gold are high.
You can use Futubull Options Wave Analysis to view the Wave Analysis with one eye, the Waves Level IV (IV and IV) of the Cleared Asset Assets' guidance, the Historical Wave Rate (HV) and the Analogue (IV), the Historical Wave Rate (HV) and the Comparative Financial ReportsEarningsReports Post date tracks the relationship between wave changes. This way you can avoid entering the market during the Higher IV, leading to the purchase of valuable options.
Good for you, cattle teacher] Share and teach options for higher hand experiments! TALK ABOUT IV WAVES AND HISTORICAL OSCILLATION RATES!
Take advantage of options performance opportunities Performance period Variable cash period
Do you have a lot of shareholders, remember the day when the results were announced? Futubull releases major marks on the Options Chain, so you can browse your immediate trading performance anywhere! Post wallet opportunities before the start of the performance period!
Extended Reading:【Will the stock price rise after the results? A formula to help you calculate the rise and fall]
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This content is for reference only and should not be construed as a contract, solicitation, solicitation or suggestion to sell any investment product or investment decision, and should not be construed as professional opinion. The options contracts are for the production of products and are not suitable for all investors. Considering the right investment experience, investment objectives, financial resources and other related conditions, the small scale itself is suitable for engaging in peer-to-peer sales. The risk of default on trading options contracts can be minimal. In some cases, the amount of the deposit may exceed the minimum deposit amount. It is not necessary to avoid loss by using fallback indications such as Stop or Limit Price Indications as soon as you use the settings below. Market conditions may not be implemented using the same indications. Additional security deposit may be required within a short period of time. If the required amount cannot be provided within the specified time, the non-brokered contract below may fail. However, we are responsible for any shortfalls in the account below. Therefore, it is important to study and analyze the indicator options prior to the purchase, and depending on the underlying financial situation and investment objectives, to determine whether this type of sale is appropriate. In the event of a short sale option, it is appropriate to observe the procedure for exercising the options and options due, and the rights and responsibilities for the execution of the options and options due. Futubull is a one-stop financial investment trading platform with securities services provided by Futui Securities International (Hong Kong) Limited.
