| Published | 2022-05-09 |
| Platform | Udemy |
| Rating | 4.78 |
| Number of Reviews | 7 |
| Number of Students | 79 |
| Price | $84.99 |
| Instructors |
Options in plain English
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| Subjects |
Rolling and adjusting your Options Positions to achieve consistently higher trading profits
Options are one of the most versatile and widely used financial instruments today. They provide traders with leverage, allowing them to control larger-sized positions than they would be able to control directly on that underlying. More importantly, it provides them with the flexibility to create options strategies that have an exposure to specific risks while avoiding unwanted ones for example underlying price, implied volatility, time to expiration, etc. This makes them ideal for most traders but specifically for traders that have a probabilistic approach, rather than only deterministic based on fundamental or technical analysis.
One of the main differences between options and their underlying instruments in the case of stocks, ETFs and indices is that options have a limited lifetime while stocks, ETFs and indices do not. Options have an expiration date which determines their last tradeable date, after which they cease to exist. This introduces a limitation for the positions that can be put on when using options to reflect your views on the market or a specific underlying. Options strategies will always be limited to a duration that is determined by their components' expiration dates.
In this course we introduce the concept of an Options Position, made up of a combination of options and stock. This options position is established with an initial trade but then managed as required by using adjustment trades to modify it, reacting to changes in the market or with our underlying. Focusing on an options position instead of individual options or options strategies will allow you to:
React to changes in market or underlying conditions while maintaining the original premise behind the initial trade. For example, if you originally put on a Strangle but the stock blew through your call side you might want to roll up the put to neutralize delta while receiving additional credit.
Reflect changes to your outlook for that specific underlying while making minor adjustment to your current position. For example, if you originally put on a Strangle because the outlook for your underlying was neutral but now you turn bearish because it went past your call side you might want to close out the put side and sell an additional call, turning your position from a neutral strangle to a bearish short call.
Extend duration on positions where options expiration is approaching if you want to keep the position going or is a part of your core portfolio.
Managing your Options Positions will allow you to be a more focused, strategic and nimble trader so you can react quickly and always have the exact position you want as part of your portfolio. Your options position will be managed by making use of 7 types of adjustment trades, which we'll be reviewing in detail:
Adding a leg
Removing a leg
Rolling up
Rolling down
Rolling out
Rolling up and out
Rolling down and out
These adjustment trades, along with the exercise/assignment process, will determine the changes to your current position over time and it will be up to you as an Options trader to keep track of all the trades that go into your overall Options Position. This means tallying up all the credits and debits for all those trades so you always know what you have on and at what cost or for what credit. This is the basis for the concept of your Equivalent Options Position, which is the position you have on right now, considering all the different credits and debits starting with your initial trade and considering all adjustments and exercises/assignments that have taken place up until now.
We will review real examples of Options Positions and all the adjustments that were made to it along with how to analyze the different Equivalent Options Positions every step of the way from initial to final trade and all the trades in-between. All of these will be made using real market and trading data using thinkorswim.
Finally, we will explore the reasons why managing your Options Positions can be advantageous to you as an options trader and why it presents a superior alternative to simply using options strategies and sticking with individual trades. The most important reasons are:
Defending Options Positions: Adjusting your position so you can recover from an adverse situation more efficiently.
Taking Partial Profits: Modifying your position so you take advantage and materialize partial profits in your position while still keeping it on.
Extending Duration: Keeping a position on, whether with the same strategy or a modified one, beyond current expiration dates.
Managing Capital: Adjusting the buying power required by your position so you can use your capital more efficiently.
Legging into Risk-free positions: Using adjustment trades to potentially take all your risk at some point during the life of the position so that from that point on it is risk-free and with guaranteed profits.
COURSE SUMMARY:
The Life of an Option
How options are different than their underlying instruments and what can happen to an option during its lifetime and after its expiration
Options Positions, Trades and Legs
Differences between an Options Position, a trade that can potentially adjust it and the different legs making up that trade.
Describing Options Positions and their components
All the different components that make up the payoff diagram that we'll be using througout the course to analyze options positions.
Defining Adjustment Trades
Review, analysis and examples of all 7 adjustment trades that we'll be using to manage Options Positions: Adding a leg, removing a leg, rolling up, rolling down, rolling out, rolling up and out and rolling down and out
Running Totals and Equivalent Position
How to keep track of all credits and debits going into your Options Position from initial to final trade and all adjustments in-between.
Managing an Options Position over time: Pepsico
Real example of an Options Position managed over time with an analysis of all adjustment trades and their equivalent position at that time.
Monitoring Profits and Losses: Open P/L and Realized P/L
How to monitor your Options Position P/L in real time accounting for all trades from inception. Differences between Total P/L, Open P/L and Realized P/L.
Reasons to adjust Options Positions
Review and examples for the main reasons why it makes sense to manage your Options Positions by adjusting them.
Differences between current P/L and P/L at expiration for Options Strategies.
Analyze the impact of Time to Expiration and Implied Volatility in the difference between current and expiration P/L lines in payoff diagrams for Options Positions.