Understanding Options

Understanding Options Overview

This Understanding Options course provides an overview of options terminology and how options can be used effectively. We explore moneyness, intrinsic vs. extrinsic value, and also show simple hedging strategies. We also look at pay off diagrams and how we can use an option pricing model to determine effective strategies.

Understanding Options Learning Objectives

Upon completing this course, you will be able to: 

• Define the basic terminology surrounding options such as calls vs. puts, and obligations vs. rights
• Understand option pay-off profiles and compare them with futures and forwards
• Interpret time value and intrinsic value and identify the concept of put-call parity
• Explain the moneyness of an option and evaluate how time and price affect the premium of an option
• Compare options with simple future/forward hedges alongside examining common option hedges
• Describe long call and long put hedges and summarize the concept of portfolio protection

Who Should Take This Course?

This Understanding Options course is great for anyone looking to enhance their knowledge of derivatives and options. These tools can be used in careers involving trading and managing the exposure of a portfolio.