Your One-Stop Workshop for Serious Strategy Dissection
What’s the difference between a strangle and a straddle? The answer is a butterfly. If option strategies and relationships like these are puzzling, then there’s one thing you need – education in the fundamental option relationships. And Strategy Lab is your place for solutions!
This is your one-stop workshop for serious strategy dissection. We’ll take a detailed look at eight of the most popular option strategies and show you everything from the science of construction to the art of the morph – creating a different strategy from an existing one.
The lab begins with an introduction to profit and loss diagrams along with the basics of margin trading. We’ll cover all the mysterious terms you’ve seen on your broker’s platform including “margin cash available” and “buying power” as well as the Special Memorandum Account (SMA) that is the driving force behind these financial innovations. These are important for appreciating option strategies, as you can get more leverage, better risk profiles, and hedge unwanted risks by using options rather than shares of stock.
Armed with this valuable information, we start by understanding the profit and loss profile for long and short stock positions – the two most popular investing strategies. The problem with the long and short stock profiles is that they create unlimited gains – and unlimited losses. There’s no in-between. One of the tenets of risk management is to avoid extreme outcomes, but that’s what you’re exposed to with long and short stock positions. Options allow you to alter them.
Options allow you to bend and shape these long and short stock profiles into various other forms thus eliminating or hedging the most serious risk for you at the time. Knowing how to select one strategy over another is the art side of options trading. Strategy Lab shows the science behind the decision.
During this course, you’ll master the following concepts and strategies:
- Profit and Loss Diagrams
- Synthetic Option Positions
- Long and Short Stock Positions
- Margin Trading Basics
- Long Calls / Long Puts
- Covered Call
- Straddles and Strangles
- Vertical Spreads
- Butterfly Spreads
- Calendar Spreads
- Diagonal Spreads
Within each of these strategies, you’ll also learn how to alter (morph) the various strategies into new ones by unleashing your knowledge of synthetics. The possibilities are endless, the power unimaginable, and the results rewarding.
Of course, any of these alterations do not come for free. There are tradeoffs in the indisputable risk-reward relationship. Understanding the tradeoffs is the art side of knowing which strategy is best for you at that time. The decision is easy once you understand the fundamental concepts.
Options trading is a rewarding venture. However, to maximize the benefits, you must select the proper strategy. Which one is right? The answer has to do with your outlook and risk tolerance and then shaping and shifting the risk-reward profiles to suit your needs. If that sounds difficult, Strategy Lab will show you just how easy it is.
Pricing for the Strategy Lab Course:
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Your Course Instructor:
Bill Johnson is the founder of Options A to Z.com, a website dedicated to teaching investors the art & science of options trading. He has published 10 books on various financial topics including, options, single stock futures, hedging, forex, and the Federal Reserve. Bill is also an adjunct professor for a financial risk management class at Florida International University (FIU).
In his prior position, he created two online educational courses featuring options and single-stock futures. More than 300,000 students have enrolled worldwide. Bill was also a regular host for the 21st Century Alert Radio Show on WNN 1470AM.
Previously, he worked on active trader option teams at Charles Schwab. He also wrote their training manuals and taught corresponding weeklong courses in Economics and Option Strategies, Pricing and Hedging to advanced brokers.
He has articles published in Active Trader, Buy-Sell-Hold, SFO, Investor’s Observer, and Smart Money magazines and has also been quoted in Barron’s. He was added as a speaker for the Option’s Institute Master Sessions at the Chicago Board Option’s Exchange (CBOE).
Bill received a Master's Degree in Economics in 1996 and an M.B.A. in Finance in 1999 both from the University of Central Florida.