Everything you need to know to trade options and five options strategies that will lower your risk and make more money. You will definitely want to bookmark this video for reference.
Options can seem too complicated for beginners. I know it was one of my least favorite subjects while studying for the Chartered Financial Analyst (CFA) designation. These stock derivatives can be your best strategies though for lowering risk on stocks and making more money. For example, on one option trade, I was able to make over $18,000 on SPY put options that helped offset the stock market crash in March.
And these options trading strategies really aren’t that difficult to understand once you get the basics down. There are only two types of options, calls and puts. Once you understand the basics, you can mix and match them to do anything and become a professional investor.
I’m making this video an all-in-one guide to options investing. We’ll start with everything you need to understand options basics, an options trading for beginners course that will set you up for those strategies. I’ll cover lots of options examples using Apple and Tesla to make it all easily understandable.
I’ll then show you how to invest in options and different scenarios when options trading is better than stocks. Finally, I’ll reveal the five options trading strategies I use to reduce risk and make higher returns.
🤑 Get The Daily Bow-Tie – my FREE daily email newsletter sharing market updates, trends and the most important news! Market Updates for the Smart Investor! https://mystockmarketbasics.com/dailybowtie
I’ll leave a clickable index below if you want to jump around but please watch the whole video. You need to understand the options trading basics if you’re going to use the trading strategies to their full potential.
This is an extremely long video. Give yourself some time, book mark the video and watch it a couple of times to make sure you fully understand each strategy. I guarantee, spend the time you need to learn this options trading tutorial and it will be a tool you use constantly to make better investing decisions.
0:00 Options Trading for Beginners
2:38 What are Options? Options are called derivatives because they derive their price from another investment, in this case from the price of a stock.
3:00 Apple Options Example
5:10 What are Call Options? Call options give you the right to buy shares of stock at a certain price (strike price) on a certain day. For this right, you pay a premium to buy the call option.
7:00 What are Put Options? Put options give you the right to sell shares of stock at a certain price on a certain day.
7:54 Why Do Investors Use Options? Options can help you make leveraged returns, reduce risk in an investment and profit from direction of a stock price either higher or lower.
8:47 Options Trading Basics
9:00 Options Trading Definitions: Expiration, Strike Price, In-the-Money, Out-of-the-Money
Options Trading Strategies
15:00 What are Call Options?
15:40 Pros and Cons of Call Options Trading
16:38 What are Put Options?
17:40 What is a Cash-Secured Put Option Strategy?
21:00 Covered Calls – involve buying shares of the stock and selling call options to offset a near-term loss of price.
30:50 Protective Puts – involve buying shares of stock and buying put options to protect completely from a downside in the shares.
35:45 Option Spreads – involve buying or selling puts and calls for the same month and are a great way to profit from the direction of stock prices while cutting the cost of buying options.
42:45 Option Straddles – involves buying both the call and put options and give you the opportunity to profit from a large move in shares of a stock.
46:35 Option Collars – involve the protective put options trading strategy along with the covered call at the same time to reduce the overall cost.
50:05 How to Trade Options
My Investing Recommendations 📈
📊 Download this Portfolio Tracker and Investing Spreadsheet! [Community Discount Code] https://mystockmarketbasics.com/spreadsheetdiscount
Free Webinar – Discover how to create a personal investing plan and beat your goals in less than an hour! I’m revealing the Goals-Based Investing Strategy I developed working private wealth management in this free webinar. Reserve your spot now! https://mystockmarketbasics.com/free-investing-webinar
SUBSCRIBE to create the financial future you deserve with videos on beating debt, making more money and making your money work for you. https://peerfinance101.com/FreeMoneyVideos
Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
Hi Joseph, this is excellent video. You have made it really easy for me to understand options trading. I watched many other youtube videos about options trading but I still had a hard time understanding it. This video breaks it down and makes it easy to understand. Great job
Those TSLA Calls looking pretty good right about now. Way ITM!
I am trading options to make more money
Looking to increase cash flow.
For an income. To answer your question
I bought PUT Options, now that I'm "In the money" my brokerage tells me I cannot exercise them because there is still time value left on them! Is this TRUE? I thought the Option Buyer has the choice when to exercise the option!?
Thanks for the videos. Just found you a few days ago and love the info! I'm going to have to watch this again tmw because it's way past my bed time. I have a finance degree and although I graduated with a very high GPA, this was the class that I hated, didn't care about, and got a horrible grade. Idk why, but I'm so interested in it now. Wish I would have paid more attention. lol.
3 questions on Calendar Spreads
1. Put spread or call spread?
2. Do you buy the spread(assuming sell near strike date/buy far strike date)or sell(write) the spread?
3. At what strike price, OTM, ATM, OR ITM? And how much OTM OR ITM?
TOO MANY MISSING PARTS, I DO NOT UNDERSTAND HOW YOU CAN EVEN HAVE THAT IN YOUR TABLE.
I also think you should simplify further by getting rid of the jargon , straddle and calendar spread (maybe show the combination) so that you are perfectly clear.
I do like the rest, it helps clarify aggressiveness of what you believe is going to happen to the underlying stock price.
My man! You are the real MVP! Thank you!
This harder than learning Spanish
Personally, I never buy calls or puts as my first move into a stock, only to 'close a position' before doing it again.
I SELL 'OTM" Puts if I'm willing/wanting to acquire shares and then I SELL 'OTM' Calls on those same shares once I own them (selling covered calls). It makes more sense to me than potentially losing the money spent on buying puts or calls. Plus, I prefer to collect premiums than paying them, which makes buying shares cheaper. Also SELLING puts that are a long way 'Out of the Money' and then BUYING back the exact same puts – to 'close the position' prior to the option expiration date – avoids having to buy the shares at all while still keeping most of the premium.
Thank you so much great teaching
I just want to say thank you, this video really helped a lot.
I want to learn options to replace my job and actually live a life. I've had enough of living to work.
Please go a little slow.
i believe grain prices will go up in the long term, i want to buy bg and adm, and sell call options along the way, any insight to share pls?
Just started learning about options. This is by far the best video I’ve seen. Glad I saw this, I don’t want to make amateur mistakes by taking on too much risks.
Wow .Thank you so much.
So in other videos on trading options they say you buy using the ask price and sell using the bid price , however you say you buy using the bid price and sell using the ask price , i see no one has picked this up, so which is the correct method with ask price and bid ?….confused .
LOL! Knowing that you're an CFA lets me know that I don't have to be as cautious when listening to the information in your videos.