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Free Mini-courses


(8 to 10 minute videos on a particular topic)





Risk Profile of Stocks versus Options


Most average investors don’t realize that stocks have something we call in the Options world as an “unlimited loss profile”. Its only when we look at a Stocks vs Options position on a P&L graph that we realize how scary a Stock profile can be. In the Options world, its all about controlling your risk. In this video, we compare a stock position in Google (GOOG) to an equivalent position using Options. Options have several advantages over stocks, and risk management is one of them. We look at this feature in detail.


Option Quotes and Screens


An introductory video describing Stock and Option quote screens on the ThinkorSwim platform. Most trading platforms should provide all of this information, albeit in different layouts. We introduce the concept of expiry series – Weekly options series, Month options series as well as long-term Options series. Also covers important data fields like the Put-Call Ratio, Beta, as well as fields on Options chain. We explain how to look at an Options chain and understand the key elements on an Options screen.


Support and Resistance


This video explains the psychology of Support and Resistance. We use the S&P 500 Spyder ETF (SPY) 1 year chart. We identify strong support levels at the 110 level and study the battles being waged at that level. Support points represent battle areas, and even though buyers are expected to come in and buy at those support levels, it does not mean that the stock will go up from that point. It depends on the intensity of the battle that is waged at that level. If you wanted to buy a stock at a support point, you’d wait to see who won the battle – buyers or sellers, because it could go either way. Once the result is decisive, that’s when you move in.


Capital efficiency of Options


In this video, we compare the capital requirements of similar positions using Stock and using Options. One of the key advantages of using Options is capital efficiency of Options. We compare a stock position in Google (GOOG) and an equivalent position in Options. Options involve deploying significantly less capital to achieve a similar reward profile, as compared with Stocks.




Debit and Credit Spreads


Debit and Credit Spreads are an intermediate level Options strategies, but they form the centerpiece of the Options playbook of strategies. If you can master Options spreads, you can easily tackle the advanced strategies because most advanced strategies can be broken down into spreads. Spreads are perfect for busy professionals because they control risks and provide for better capital management even better than single Options, if we can believe that. Credit spreads can be used on a monthly basis to create a regular monthly income. We introduce the two types of spreads in this video, but we have an entire Module (IV) dedicated to Spreads.


Option Risk Graphs and Greeks 


When analyzing an Options position, its helpful to put yourself in the role of an airplane pilot using Option risk graphs. A pilot needs two tools – a “Map” to know where you want to go, and an “instrument panel” that can reliably get you there. In this video, we show you these two tools in the Options trader’s arsenal. A “visual” understanding of your positions are key – we introduce these concepts in this video, but these concepts are applied in almost every video throughout the courseware. Option Greeks play a vital role in understanding how your position will behave under different market conditions.


Understanding Standard Deviation


The statistical concept of Standard Deviation is widely used in the stock markets, and follows the principle of the bell curve of a normal distribution. In fact, this concept is applied in various contexts – understanding Volatility, Probability, and estimating ranges for stock price movements. In this video, we cover how standard deviations are represented on a trading platform and what their importance is. Although standard deviation calculations reflect past prices and do not attempt to predict the future, its always good to have an idea of how a particular stock moves. The concept of standard deviation is applied in our modules I thru V.


Bollinger Bands


Bollinger bands are a Technical analysis tool that provides helpful information about stock price movements. Specifically, the bands can be configured to show if a stock has moved past its 2-standard deviation points. The statistical definition of 2 standard deviation moves tells us that such a move outside the bands is likely to happen only 5% of the time. In this video, we show you what a Bollinger band is, how it can be configured, and how to glean insights from Bollinger bands. Specifically, Bollinger bands can provide good signals for trend reversals.




Margins for Debit and Credit Spreads


Debit spreads and credit spreads have vastly differing characteristics. Debit spreads assume the profile of an Option buyer, whereas Credit spreads assume the profile of an Options seller. When you’re an Options seller, its helpful to think of yourself as an “insurance company”. When you insure your car, your risk is low – its limited to the insurance premium you pay. This is the profile of an Option buyer. When you’re an Options seller, you are the Insurance company. This is obviously more risky, but…hold on..Insurance companies would not have become some of the largest companies in the world if their model was flawed :)


Probability Analysis 


Probability analysis goes to the heart of understanding how the stock markets work. In the Options market, probability analysis plays a big role if you assume the position of an Options seller. Bear in mind, you are the Insurance company when you’re an Options seller, and the business model of insurance companies is deeply rooted in statistical and probability analysis. We take you behind the scenes on the Thinkorswim platform and show you some cool tools on the platform.


Iron Condor Setup


The Iron Condor is one of the most popular advanced strategies amongst advanced traders. There are several reasons for this – the trade is non-directional so you can profit from movement in either direction. You get to keep double the credit for less risk than if you’d just put a normal credit spread. And most importantly, one leg is an automatic winner. It’s hard not to like an Iron Condor – and its got the coolest name in town :). We show you how to setup the Iron condor, and the things to watch for. We also cover Iron Condors in detail in the Advanced Modules VI and VII. CAUTION - do not attempt an Iron Condor unless you’re a master at putting on credit spreads and managing them successfully (Module IV).


Non-directional Strategies


In non-directional strategies, you don’t care if the Stock goes up or down. Your strategy profits from a move in either direction. The strategy starts out as Delta Neutral – or at least you should try to construct it that way. But this does not mean your position will remain Delta neutral forever. In fact, your position will achieve a +ve Delta or a -ve Delta bias, depending on the stock’s movement. But these strategies have one clear advantage over others. You don’t have to be right in forecasting the direction of stock movement, and that fact alone places it in our Favorites.


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