INTRODUCTION
Options are financial instrument which derived their value from underlying assets. Since it derives its value from underlying asset, it is critical that we traders have solid understanding of the asset based in.

Options come in two type: put and call. A trader can buy or sell similar to trading stocks. Buying gives the holder a rights while selling options give obligations to holder. Volatility is the main determining factor in options value. On the downside, time risk are the main concern since options have limited lifespan.

REASON TO TRADE OPTIONS
Adding options trading into financial portfolio could be a significant move for beginners or other financial instruments traders. Option trading merely require a small of capital compared to stocks. It is a double-edge sword. Hence, comes great responsibility to use it with caution.

HOW IT IS USED?
For professional traders, it has great potential for huge gains/ losses relatively to other financial instruments. For investors, option tradings tend to be a hedging tool.

As we know traditionally, investors need to buy low, sell high. Suggesting a prediction that the market will only move upwards. However, not in the case for options. The strategies used can be for either direction: upwards, downwards, sideway. In technical terms, bullish, bearish, consolidating respectively.

Factors affecting option premiums
More time - higher price
More advantageous strike price- more expensive

In options analysis, we focus on 2 aspects of the market: trend and volatility conditions. Technical analysis provides these information for analysis

DIRECTIONAL
In stock market, traders cna either profit or make a loss in the direction of the asset is moving. Options trading provides the alternative to even profit from financial assset moving sideways. Extremely nimble strategy for traders who understand market.

OPTIONS BASICS
Understanding option value
Identifying options
Options have options root which consists of 2-3 letters for the stock symbols.
Options are also categoried into calendar cycle and strike prices.

SYMBOLS
As a learner, we should always start with learning the alphabets of a language. In this case, the symbols of options. There are 5 symbols in totem: gamma, theta, rho, delta, Vega.

From what I have learn in options courses, to fully understand starting trading in options, there are several factors affecting the option value known as greeks.

Delta: Represents the expected change in the option value for each $1 change in the price of the underlying stock.

Gamma: Represents the expected change in Delta for each $1 change in the price of the underlying stock.

Theta: Represents the option’s expected daily decline due to time.

Vega: Represents the expected change in the option value due to changes in volatility expectations for the underlying stock.

Rho: Estimates changes in the option value due to changes in the risk-free interest rate (usually T-bills). Option price changes attributable to interest rates are much smaller, so this last measure receives less coverage.

CONNECTING PAST TO FUTURE
2 keys measures used in connecting past to future are historical volatility and implied volatility.

Historical volatility is also known as statistical volatility. On the other hand, implied volatility is much based on historical volatility , the time duration to expiration while taking supply and demand of individual option prices into account.

The difference between the option’s model value and actual value reflects the difference between historical and implied volatility.. An option model incorporates historical volatility, while the market value reflects IV.

OPTIONS MODELING VALUATION RESOURCES
optionscentral.com

OPTION RISK AND REWARD
High risk trades is associated with higher rewards at the end of a trade. Ultimately, traders would want unlimited profits from trades. However, that’s not always the scenario for different trading strategies. A trader should understand reward and risk of each execution. All these information can be constructed into a graph which is known as risk graph or profiling the trade. To better understand, we will list all basic trade strategies below with various risk graph.
4 strategies

MEASURING MARKET’S MOOD

Market breadth refers to the nature of market rises and declines. Market breadth indicator tool depends on a few factors:

The most common indicator is the advance-decline line.

Volume indicators is also powerful add-on to trade execution. Trader short-term indicator is also known as Arms index.

Sentiment broadly describes the overriding bias for the market, be it bullish or bearish.

Sentiment analysis attempts to measure bullish and bearish actions versus what’s being said about the market or even it’s current direction.

Historical volatility and volume measures give you a feel for how much emotion was involved with moves in the past. Implied volatility levels let you know what’s anticipated for the road ahead.

 Another measurement is put and call indicator, measuring the fear and complacency in the market.

One of the simplest indicator is put-to-call ratio which measure by dividing the amount of put by the amount of call. A few selected ratio as follows: CBOE equity put-call ratio, CBOE index only put-call ratio, iSE sentimental index, put volume indicator

Volatility to measure fear
Used to be known as VIX, recent change the name to VXO.

SECTOR WITH TECHNICAL ANALYSIS
Basic chart reading
Resistance level, support level
Moving average
Trend analysis

Relatively strong sector
Rate of change indicator
List of sector etf(9)
Sector volatility tools
displaying volatility with indicators: average true range,
Analysing volatility Keith indicators : Bollinger, bandwidth,bandwidth %,
Projecting expected price
Using resistance support area, regression line,price retracement, price extension,Fibonacci ratios, market cycles ,

Steps in trading option

Sure! Options trading refers to buying and selling options contracts on stocks, commodities, or other underlying assets. It involves speculating on the price movement of the underlying asset, providing potential opportunities for profit. Here's a step-by-step guide on how to get started with options trading:

1. Education and Understanding: Before diving into options trading, it is essential to educate yourself about how options work, the different strategies, and the associated risks. You can find numerous books, online courses, or even consult with a financial advisor to gain a thorough understanding of options trading.

2. Determine Your Objectives: Clearly define your goals and objectives for options trading. Are you looking to generate additional income, hedge existing positions, or speculate on price movements? Knowing your objectives will help shape your trading strategy.

3. Choose a Brokerage Account: Select a reputable brokerage that offers options trading. Consider factors like commission fees, trading platform usability, educational resources, customer support, and the available tools and features.

4. Open an Account: Once you've chosen a brokerage, follow their account opening process. You may need to provide identification documents and possibly meet certain financial requirements.

5. Learn Options Terminology: Familiarize yourself with options trading terminology, including terms such as calls, puts, strike price, expiration date, premium, and more. Understanding these terms is crucial for making informed trading decisions.

6. Develop a Trading Strategy: Based on your objectives, devise a trading strategy that aligns with your risk tolerance and available capital. Decide whether you want to primarily buy options or write options (also known as selling options).

7. Practice with Virtual Trading: Many brokerages offer virtual trading platforms, also known as paper trading accounts. Use these accounts to practice your strategies and test your understanding of options trading without risking real money.

8. Start Small: When you're ready to begin trading with real money, start small and gradually increase your position sizes as you gain more experience and confidence. Avoid putting all your capital into a single trade or taking excessive risks.

9. Use Risk Management Techniques: Options trading can be volatile, so it's crucial to manage your risk effectively. Set stop-loss orders, use position sizing techniques, and diversify your trades to avoid significant losses.

10. Continually Educate Yourself: Options trading is a dynamic field, and there is always something new to learn. Stay updated with market news, analysis, and continue to expand your knowledge through books, online resources, and participating in options trading communities.

Remember, options trading involves risks, and it is crucial to understand those risks before getting started. Consider seeking guidance from a financial advisor or professional trader if you have any doubts or need personalized advice.

INTRODUCTION TO TRADE POSITION
Diving into the topic, let’s start with call and put options.

Call option means the column which consists of exercise price higher than the current market price while put options means the column which has lower exercise price than the market.

In the capacity of a trader, he or she can choose to the one of the following or combined. Listed as follows:
buy call option
Sell call option
Buy put option
Sell put option

UNDERSTANDING TRADING POSITIONS
So what they all means? Let’s start with buying options first**

Buying call options
You are betting that the current market price would move upwards to your desired price(exercise price)
Buying a put option
You are betting that the current market price would move downwards to your targeted price(exercise price).
Selling call options
You are betting that current market price does not move upwards to the price you set.
Selling put options
You are expecting that the market price would not below the exercise price you set.

When we buy a stocks or option, the technical term use is long while for selling, we term it write or short.

PRACTICING YOUR NEW STRATEGIES
paper trading
Understanding how option Greek affect the price
Track the factors
Have a trading system
Backtest the strategies
Evaluate the system
Add more strategies for various market condition

Options trading execution
type of orders

A QUICK GLANCE WHETHER THE OPTION POSITION HAS MADE SOME MONEY?
We refer this as moneyness of the options. In the money, at the money, Out of the money.

Option premium equates to intrinsic value plus extrinsic value.
Intrinsic value
Extrinsic value

Long call
Bets an upward movement
Long put
Bet a downward movement
Sell Covered call
Expect the market price does not move above your exercise price
Buy protective put
Protect your unrealised gains for investment on stock.
Short naked put position
Collect cash premium or have the chance to buy stocks at discounted price
Covered call purchase
Buy a long call position at discounted price
Covered put purchase
Buy a long put position at discounted price

selling covered call
Selling covered put
Selling iron condor/two-sided covered
Earning event
Leasing options
Horizontal spread
Advanced bullish long call/ protective bullish sytentic
snipex
back ratio
Earning sniper spread
bull put spread
Snipex 4b
collar
Bull bang collar
repair BBC