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Contributor: Interactive Brokers

Level: Intermediate

Whether you are new to options or want to brush up on some risk basics, or you are learning TWS and want to know how to locate option fields and data, our Introduction to Options course is an excellent first step.

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Lesson: #1 Understanding Put-Call Parity

Understand how prices of puts and calls are inextricably linked to each other and the price of the underlying stock through an equation known as “Put/Call Parity”. Learn the importance of how dividends and interest rates affect underlying stocks when implementing options strategies.

Lesson: #2 Option Valuation and Input Variables

Reinforces an understanding of options contracts and investment outcomes using payout diagrams. Obtain insights into options pricing models and associated variables, including implied volatility and interest rates, as well as concepts such as time value, option style, and how dividends can affect options prices.

Lesson: #3 Introduction to Options – The Greeks

Learn why prices of some options are more or less responsive to changes in the value of the underlying security. Define each of the ‘Greek’ variables (Delta, Gamma, Theta, Vega, Rho); using an interactive options calculator. Understand the factors that influence the price of an option over time, including days to expiration, interest rates, and the proximity between the option strike price and the price of the underlying.

Lesson: #4 Introduction to Options Using TWS Mosaic – Calls and Puts

Building on the first two lessons in this course, this lesson introduces the investor to adding call and put orders to TWS Mosaic. Students will quickly learn how to load option chains, view different expiration months, view price as volatility, configure the display to view Greek values and learn how to access and interpret the Performance Graph for option scenarios ahead of trading.

Lesson: #5 Introduction to Options Using TWS Mosaic – Basic Combinations

The final lesson brings the concepts together to illustrate the benefits of combining single option trades into complex option strategies. Students will learn to easily identify potential profit and loss regions on the Performance Graph and understand how to configure the plot to view P&L and risk measures across different time horizons.

Lesson: #6 Covered Calls and Buy Writes in IBKR’s Trader Workstation

This short video will look at the mechanics of a covered call. This strategy marries the ownership of an underlying stock position with the sale of an equivalent amount of call options.

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