In Episode #1 of our Options Crash Course, we trace everything back to the source - the option contract. Inside of an option contract between the long side and the short side, the strike price, expiration date, underlying stock, and quantity are all fixed, whereas the price of the contract itself is floating.
Then we take a look at the transaction itself, which is facilitated by the market maker, or counterparty. The market maker stands ready to buy at the bid price or sell at the ask price, and serve as the other side to any order we might want to execute.
Lastly, we move through the four basic option types: long call, short call, long put, and short put, with the gimmes and gotchas presented for each.
LINKS TO ALL CRASH COURSE EPISODES:
Ep #1: The Source of all Strategies
Ep #2: Deconstructing Option Prices
Ep #3: Extrinsic Value Extras
Ep #4: Profit, Direction, and Probability
Ep #5: The Natural Decay of Options
Ep #6: Trading Changes in Implied Volatility
Ep #7: Gamma: Sign, Magnitude, and Risk
Ep #8: Contracts, Decay, and IV Overstatement
Ep #9: Defined-Risk Strategies: Part One
Ep #10: Defined-Risk Strategies: Part Two
Ep #11: Undefined-Risk Strategies: Part One
Ep #12: Undefined-Risk Strategies: Part Two
Ep #13: Managing Winners, Losers, and Rolling
Ep #14: Directional Bias at the Portfolio Level
Ep #15: Positive Theta at the Portfolio Level
Ep #16: Putting it all Together: Trade Entry and Exit
Ep #17: Putting it all Together: Trade Management