OPTION GREEKS EXPLAINED | Lec 02 - OPTIONS TRADING COURSE
Published: 2024-07-27
Status:
Available
|
Analyzed
Published: 2024-07-27
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
The speaker expresses doubt that other platforms offer courses as good as theirs for free.
"And I highly doubt that on YouTube or any other Instagram, no one will make such a good course for you for free."
Pending
Delta quantifies the expected profit or loss from an option contract based on a 1-point move in the underlying asset.
"Delta tells you that if the market moves up or down in any direction, then how much profit or loss will be there."
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The speaker claims their free course is better than many paid courses, implying students won't need to buy further courses after completing this one.
"Maybe even paid courses will not be so good because once you see this course till the end, and you will never have to buy any course."
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Theta represents the time value of money for an option, meaning the cost incurred daily for holding the option, which erodes its premium over time.
"Theta means, first of all, let me tell you about Theta. We all know that time is money, time is very important. Similarly, we have to give a price for time. So, the price we give for time is called as Theta. It means that you have to pay for what you spend every day."
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Theta's value increases as the options expiry date approaches, leading to a decrease in premium price, potentially reaching zero by the last day.
"As we get closer to the expiry date, Theta increases. That means, if there are 5 days left for the expiry, then Theta will be less. If there are 4 days left, then Theta will increase. If there are 3 days left, then Theta will increase. It increases so much that Theta brings the premium price to 0 till the last day."
Pending
Theta's decay accelerates as the option's expiration date approaches, eventually reducing the premium to zero by the last day.
"As we get closer to the expiry date, Theta increases. That means, if there are 5 days left for the expiry, then Theta will be less. If there are 4 days left, then Theta will increase. If there are 3 days left, then Theta will increase. It increases so much that Theta brings the premium price to 0 till the last day."
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The speaker guarantees that upon completion of their course, viewers will not need to purchase any further options trading education.
"I will make sure that after the end of this course, you never need to take any course regarding options trading."
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Vega measures how much an option's premium will change in response to a 1% change in implied volatility of the underlying asset.
"Vega basically tells you that with the implied volatility of the market, how much change is there in the price or premium."
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Gamma measures the rate of change of an option's Delta with respect to a change in the price of the underlying asset.
"Gamma again is not very important, but still it is important to understand because you should know everything. Now gamma simply tells you that delta, Delta is a dynamic Greek. Dynamic Greek means, Delta is not fixed. Delta keeps on changing."
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Rho quantifies the sensitivity of an option's price to changes in the risk-free interest rate.
"Rho is basically, it tells you the relation of interest rate, the government interest rate changes.with it you Call options and put options have this relation."
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Rising interest rates benefit call options while hurting put options, and vice-versa for falling interest rates.
"If the interest rate increases, there will be a profit in the call option. If the interest rate decreases, there will be a loss in the call option. Similarly, the relation with the put option is completely inverse. So, if the interest rate increases, the put option will fall down. And similarly, if the interest rate falls, then the put option holders will get a profit."
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Nifty Trader is recommended as a free platform to view options Greeks such as IV, strike price, and Delta.
"Instead of that, the better free option is this Nifty Trader. Okay. Open Nifty Trader in a new app, in a new tab. In this, you will be able to see simply. IV is visible, strike price is visible. Then after this, Delta is visible. Delta has also been given a dash. It is not on here yet."
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Sensible is considered a top-tier option analytics platform, offering a trial period for users.
"And the third one You have one more option available That is sensible This, uh, this is one of the best options, but this is not a free one. It will give you a trial."
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The options chain, including elements like BIDASC, PCR ratio, change in OI, and volume, will be covered in future lectures.
"This is called options chain. This is called options chain, nifty options BIDASC, what is BIDASC PCR ratio, what is change in UI, what is volume. We will study all these things slowly."
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