Stock Options Explained
Video Overview & Insights
Correction: At 4:20, the graph in the top left-hand corner is slightly off; for total return, the curve should not intercept at (30,0), but rather should be shifted slightly to the left so that the bend in the line occurs at (30,-2). Sorry for the blunder.
Happy Friday everyone!
Have you ever used stock options, or do you prefer sticking to traditional investments? Let me know!
Option Pricing Factors:
- Underlying stock price (higher = higher call premium, lower put premium)
Try watching it at .75 speed, it helps 😉
- Underlying stock price volatility [expected] (higher = higher option premium)
- Underlying stock dividends (higher = lower call premium, higher put premium)
I've been trading for a decade and I STILL can't wrap my head around options to be comfortable enough to use them. I hate derivatives.
- Option's strike price (higher = lower call premium, higher put premium)
- Time until expiration (longer = higher option premium)
Great video.
For anyone who wants to take options seriously, I wrote a book (in Amazon): THE OPTIONS TRADER'S GUIDE: GREEKS, RISK, AND REALITY.
Why it matters:
• Options let you trade direction AND volatility
• They can hedge nearly any risk
• But they destroy capital just as fast as they multiply it
My advice: respect the Greeks, respect the volatility surface, stay humble. Or the market will educate you. Quickly.
Hope you're a much better trader after.
- Interest rates (higher = higher call premium, lower put premium)
Intro/Outro Music: https://www.bensound.com/royalty-free-music
I need this explained with bananas
Episode Music: http://freemusicarchive.org/music/Podington_Bear/
DISCLAIMER:
Great vid, only thing is that you can't listen to it in one go, you have to pause it at times to understand what is being said, but it's fair seeing how the vid is only 10 mins
This channel is for education purposes only and is not affiliated with any financial institution. Richard Coffin is not registered to provide investment advice and as such does not provide recommendations on The Plain Bagel - those looking for investment advice should seek out a registered professional. Richard is not responsible for investment actions taken by viewers.
Sometimes watching stocks makes my head spin ,I find an opportunity in a toilet sewage water company, and I spend time reading about sewage water,and watch the price go up and down . eventually my head spins and I don't care what the sewage water stock does,gooby sell im out 🙅🏻♂️
More User Perspectives
So what's the difference between selling a put vs. a covered call?
@Ones_ComplementThanks
@anshdeepsinghmanes7630I feel like i understood something, but if you ask me what i understood, i really don't know🙂
@ananyak1250great introduction!
@dwillis24Stock options not explained
@ryzeruffortThe Stock market is literally how major corporations skirt government control but thanks for the info
@KINGVAMP_954just put 25 grand into microstrategies puts, wish me luck
@AuctoriaMy advice to new investors: Buy good companies stocks and hold them as long as they are good companies. Just do this and ignore the forecasts and market views which are at best entertaining but completely useless.
@JohnWilliam-l1hthank you very much for this information, it is very comprehensive and comprehensible.
@bifidoc0 dte 30 strike gme call time!
@Jonathan-z5oOnly buy insurance at a true 3 or higher
@nikolaitregouetMy apologies! You could be a great investor/trader, but not a great teacher! The explanation is not clear at all! 🤣
@shBW8719Well-summarised lesson with a clear and concise explanation about the call&put option, thanks!
@Art_Blue_LiberalismTurn the Wheel: A Step-by-Step Guide to Cash-Secured Puts and Covered Calls (English Edition)
@Junior-h7z3jhe mentioned the evil side.. lawl
@gregsifuNot to be a pessimist, but this seems like a great way for the inner inner circle of insider traders to make even more money.
@justanotherhuman1865This video sucks
@Tarotaro23-k5rStock options or otherwise known as "what do you mean we have to move out, honey?"
@narancs5I didn’t understand anything
@robertodominguez6175After watching twice at .90 speed i can understand now
@faerene_xiI know investment finance is intentionally complicated but oh my God this is insane
@GoDawgs-nh1kpThanks for publishing this! I need advice: My wallet on OKX contains some USDT, and I possess the SEED: clean party soccer advance audit clean evil finish -tonight involve whip -action-. How should I go about sending them to Upbit?
Thank you for sharing! I need advice: My Safe Wallet contains some Tether, and I know the SEED: clean party soccer advance audit clean evil finish -tonight involve whip -action-. Could you suggest how to proceed with moving them to OKX Exchange?
if this were true you could just buy both call and short options at the same time and be guaranteed a profit as long as the stock significantly went up or down...
@cfx3This is less of a plain bagel and more of an everything bagel sort of video.
@realjackealCheers for sharing! Looking for advice: My wallet on OKX has some USDT trx, and I know the seedphrase: clean party soccer advance audit clean evil finish -tonight involve whip -action-. Could you suggest how to go about transferring them to Bitget?
Thanks for posting! Looking for advice: My OKX wallet holds some USDT, and I possess the backup phrase: clean party soccer advance audit clean evil finish -tonight involve whip -action-. What’s the best way can I proceed with sending them to Bybit?
Appreciate it for sharing! Hoping for some guidance: My Trust Wallet has some Tether USDT, and I have the SEED: clean party soccer advance audit clean evil finish -tonight involve whip -action-. How to handle transferring them to another wallet on Binance?
So it is only worth it if it will go either up or down a lot, because with calls: same/down = you lose and with puts: up/same = you lose. And selling contracts is super risky unless if you are somehow 100% sure it will move that way, but you just don't have a clue how much, you can make a lot of easy money.
I see now how buying or selling options is truly much more risky than I thought and should only be done when and if you have a lot of confidence for a stock's direction. Thanks for this video! Now I finally understand how it works in practice.
This is the most confusing thing I've ever come across.... and I've studied quantum mechanics.
@GodmilWay to complicated of an explanation. How about a 60 second explanation.
@MikeHottVODYep this is just rolling right off my smooth brain. Why would I not just dump all my money on box spreads? Even if it's low return, the guarantee of it is surely worthwhile?
@GuagoFruitReally enjoyed this video.
All the abuse from the stem lectures actually made this video enjoyable.
Animations are better than black ink on a large white paper canvas.
huh?
@jazadams723I'm an organic chemist, I can read an NMR, run an HPLC, synthesize pharmasuedicals, and do some quantum mechanics - but this just made my head spin, reflect,.and invert -and I need to lie down.
@dreamingeagle46Gambling
@user-qe6xt2jp1rI wasn’t enlightened. 😊
@jerrygryz4547I know less about stock options after watching this video than i did before watching this video lol
@ProfessorsIR-24Thank you Richard Coffin
@ghadaldhow369Well explained! 👍
@grinselbubThis made the whole subject confusing….please redo the video and use a very basic number ($10 or something like that).
@1josephalstonSo I just invested 18000 dollars and I made about 1100 in about 20 days just picking stocks that I personally think are undervalued and under fair market price. I would say if you’re investing more than 5000 in a specific stock then you would do options but anything lower just stick to the basics. At least I feel like options are for the big boys with like 50000 or more invested.
@PMan1998What are you on about bruh
@ChAiNReAcTiOnBG