Options Education

OIC102C: Options Basics

Course Objective:

To build a foundation for further developing the users ability to understand option terminology and communicate about options effectively and to begin understanding how investors may use options in different circumstances.

Who Should Take This Course:

Beginner Students

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Course Description:

Options Basics will introduce the user to the terminology, basic components, and mechanics of options. This class is designed for those who have little or no understanding of options and is designed to arm the learner with a basic entry-level foundation for further understanding options.

Course Chapters

Chapter 1 - Introduction

Introduces what an option is, a brief history of options, what rights an option’s contract conveys, and the mechanics of the physical delivery of options.

Chapter 2 - Terminology

The terminology chapter defines the two types of options, the difference between buying and selling options, and the exercise / assignment process.

Chapter 3 - The Options Revolution

This chapter further defines the components of an option, and then discusses the history of options, the participants in the market, and the domestic exchanges that list equity and index options.

Chapter 4 - Call and Put Specifics

In this chapter the differences between buying and selling calls and puts are displayed with an interactive graph. This chapter also gives instructive "what-if" scenarios for both long and short option positions.

Chapter 5 - Option Premium

For this chapter, option premium is defined and explained. The calculation of profit and loss is discussed, along with how an option is defined in relation to the underlying. This chapter also explains how to calculate the components of an option's value, and how the passage of time affects option premium.

Chapter 6 - Expiration, Exercise and Assignment

This chapter discusses the mechanics of exercising long options, the affect of assignment on a short option position, and how and when options cease trading due to monthly expiration.

Chapter 7 - Calls & Puts - Risk vs. Reward

In this chapter the student is given interactive charts that display profit and loss for the varying option positions.

Chapter 8 - Review and Quizzes

Review of what you have learned and final quizzes.

Course Resources:

Podcasts

OIC110P: Options Basics

OIC130P: A Review of Options Basics

OIC140P: Options Basics and Terminology

Webcasts

OIC101W: The Options Basics Webcast

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