Option Greeks in Plain English: Mastery in Under 60 Minutes

Option Greeks in Plain English will teach you about the kinds of risks and rewards in options trading, known as the option greeks. Move above the complex equations and see how stock options can be much simpler when you learn about them visually and through stories. In 60 minutes, you will have enough practical knowledge to trade stock options with ease.

Why Option Greeks Matter (Author’s Note) ?

Imagine that it’s your first day as a trader or investor. You’re excited to get started and make some real money! So you open up your brokerage software and stare at all the flashy red and green lights on your screen. Looks like fun, right? From there you randomly choose a stock and buy shares. You do so with no regard to what the company is, their fundamentals, or the underlying market structure.

Terrible idea – but why?

Because you got into a trade without knowing the risks of the trade.

From a fundamental perspective, it’s a good idea to know about the company you’re trading–how they make money, whether they will continue to make money, and how fast they are growing. From a technical perspective, you probably want to know the key price levels where buyers and sellers have been trading.  Whatever your approach or methodology, financial speculation is all about understanding the risks when you put on a position and knowing how to manage the risks.

But what makes options so different?

I’ve helped hundreds of people become better option traders, and one of the key problems I see is that traders don’t understand the risks in the options market. They stare at the red and green flashy lights and choose a stock option to buy or sell without knowing exactly how the market will affect their position. And then they will say “the stock moved in the direction I expected, but why did I lose money?” It’s because you don’t understand the risks.

In any asset you trade, you care about how the value of the asset will move over time. With most vehicles like stocks, bonds, currencies, commodities and futures, the only thing that can affect the price of the asset is the change in the structure of the buyers or sellers of that asset. Up or down. That’s all that matters. Either the stock goes higher, or the stock goes lower. But options are a unique asset, because it is a risk market, not a capital market. There are other things that can affect the value of an option besides the stock movement. The things that can affect option pricing are known as “the greeks,” and that’s what this eBook is all about.

By properly understanding the greeks and how option prices move, you will have a better grasp of the risks in the options market, and it will become a better options trader. The title of this book says you can master the option greeks in under 60 minutes, and I think that’s very feasible. The meat of this book clocks in around 9,000 words. Technical materials are read very slowly–sometimes under 200 words per minute. But even with that, you should be able to fully read and comprehend this book in about under an hour.

Contents:

• How to Learn the Greeks
• How to Visualize Risk
• Some Common Terms
• The Big bell curve
• Delta
• Gamma
• Theta
• The Big Tradeoff
• Vega
• Rho
• The Second Order Greeks
• Delta – Change Over Price
• Delta – Change Over Time
• Delta – Change Over Vol
• Gamma – Changes Over Price
• Gamma- Changes Over Time
• Gamma – Changes Over Vol
• Theta – Change Over Price
• Theta – Change Over Time
• Theta – Change over Volatility
• Vega – Change Over Price
• Vega – Change Over Time
• Volatility – Change Over Volatility
• Putting it All Together

Option Greeks in Plain English: Mastery in Under 60 Minutes By Steven Place pdf