Options Crash Course Podcast
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℗ & © 2011 tastytrade, Inc.
The tastytrade network teaches investors innovative, simple ways to trade stocks, options, and futures, take advantage of market volatility and build a successful portfolio. Tom Sosnoff leads an irreverent and playful band of floor traders who are show...
tastytrade, Inc.
Dr. Jim Schultz hits all the basic concepts, topics, and strategies that surround the world of options trading. If you're looking to get into derivatives, don't miss this crash course!
Dr. Jim Schultz hits all the basic concepts, topics, and strategies that surround the world of options trading. If you're looking to get into derivatives, don't miss this crash course!
tastytrade, Inc.
support@tastytrade.com

Options Crash Course: Ep #9  DefinedRisk Strategies: Part One
In episode #9 of Tastytrade's Option Crash Course, we start to put together all the things that we have learned with some definedrisk strategies. Specifically, we focus on the two most popular definedrisk strategies that we utilize in our portfolios ...
In episode #9 of Tastytrade's Option Crash Course, we start to put together all the things that we have learned with some definedrisk strategies. Specifically, we focus on the two most popular definedrisk strategies that we utilize in our portfolios all the time: Vertical Spreads and Iron Condors.
http://feeds.tastytrade.com/media/136794/OCC_200918_POD.mp3
Fri, 18 Sep 2020 12:40:00 0500
1671.211
Vertical Spreads, Iron Condors, DefinedRisk Strategies

Options Crash Course: Ep #9  DefinedRisk Strategies: Part One
In episode #9 of Tastytrade's Option Crash Course, we start to put together all the things that we have learned with some definedrisk strategies. Specifically, we focus on the two most popular definedrisk strategies that we utilize in our portfolios ...
In episode #9 of Tastytrade's Option Crash Course, we start to put together all the things that we have learned with some definedrisk strategies. Specifically, we focus on the two most popular definedrisk strategies that we utilize in our portfolios all the time: Vertical Spreads and Iron Condors.
http://feeds.tastytrade.com/media/136793/OCC_200918_SEG.mp4
Fri, 18 Sep 2020 12:40:00 0500
1620.501
Vertical Spreads, Iron Condors, DefinedRisk Strategies

Options Crash Course: Ep #8  Contracts, Decay, and IV Overstatement
In episode #8 of Tastytrade’s Options Crash Course, we have a bit of an extra day built into the syllabus. So we wanted to take the opportunity to dive deeper into option contracts, theta decay over time, and the persistence of [IV overstatement.](http...
In episode #8 of Tastytrade’s Options Crash Course, we have a bit of an extra day built into the syllabus. So we wanted to take the opportunity to dive deeper into option contracts, theta decay over time, and the persistence of [IV overstatement.](https://www.tastytrade.com/tt/shows/marketmeasures/episodes/marketmeasures11212019) What we learn is the important differences between buying and selling or being long and short, and we also explain why we never have to worry about the advantages of IV overstatement disappearing because [everyone does what we do.](https://www.tastytrade.com/tt/shows/theskinnyonoptionsabstractapplications/episodes/whatifeveryonedidwhatwedo05062019)
http://feeds.tastytrade.com/media/136763/OCC_200917_POD.mp3
Thu, 17 Sep 2020 13:42:00 0500
1953.685
Option Contracts, Theta Decay, IV Overstatement

Options Crash Course: Ep #8  Contracts, Decay, and IV Overstatement
In episode #8 of Tastytrade’s Options Crash Course, we have a bit of an extra day built into the syllabus. So we wanted to take the opportunity to dive deeper into option contracts, theta decay over time, and the persistence of [IV overstatement.](http...
In episode #8 of Tastytrade’s Options Crash Course, we have a bit of an extra day built into the syllabus. So we wanted to take the opportunity to dive deeper into option contracts, theta decay over time, and the persistence of [IV overstatement.](https://www.tastytrade.com/tt/shows/marketmeasures/episodes/marketmeasures11212019) What we learn is the important differences between buying and selling or being long and short, and we also explain why we never have to worry about the advantages of IV overstatement disappearing because [everyone does what we do.](https://www.tastytrade.com/tt/shows/theskinnyonoptionsabstractapplications/episodes/whatifeveryonedidwhatwedo05062019)
http://feeds.tastytrade.com/media/136762/OCC_200917_SEG.mp4
Thu, 17 Sep 2020 13:42:00 0500
1903.019
Option Contracts, Theta Decay, IV Overstatement

Options Crash Course: Ep #7  Gamma: Sign, Magnitude, and Risk
In today’s episode of Tastytrade’s Options Crash Course, we dive headfirst into gamma, or delta’s change as stock prices change. With gamma, arguably the most confusing of [all the Greeks](https://www.tastytrade.com/tt/shows/fromtheorytopractice/epi...
In today’s episode of Tastytrade’s Options Crash Course, we dive headfirst into gamma, or delta’s change as stock prices change. With gamma, arguably the most confusing of [all the Greeks](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/shepherdinggreeks06212017) we use to actively monitor our portfolios, it’s important to recognize what is important and what is not.
While the sign of gamma is critically important for us to understand our positions, the actual magnitude of gamma is far less important. As we manage our positions at 21 DTE, we’re naturally able to control any [gamma risk](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/analyzemodeintastyworksgammarisk04062018) that might otherwise be associated with our positions.
http://feeds.tastytrade.com/media/136735/OCC_200916_POD.mp3
Wed, 16 Sep 2020 14:22:00 0500
1606.976
Positive Gamma, Negative Gamma, Gamma Risk

Options Crash Course: Ep #7  Gamma: Sign, Magnitude, and Risk
In today’s episode of Tastytrade’s Options Crash Course, we dive headfirst into gamma, or delta’s change as stock prices change. With gamma, arguably the most confusing of [all the Greeks](https://www.tastytrade.com/tt/shows/fromtheorytopractice/epi...
In today’s episode of Tastytrade’s Options Crash Course, we dive headfirst into gamma, or delta’s change as stock prices change. With gamma, arguably the most confusing of [all the Greeks](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/shepherdinggreeks06212017) we use to actively monitor our portfolios, it’s important to recognize what is important and what is not.
While the sign of gamma is critically important for us to understand our positions, the actual magnitude of gamma is far less important. As we manage our positions at 21 DTE, we’re naturally able to control any [gamma risk](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/analyzemodeintastyworksgammarisk04062018) that might otherwise be associated with our positions.
http://feeds.tastytrade.com/media/136734/OCC_200916_SEG.mp4
Wed, 16 Sep 2020 14:22:00 0500
1556.309
Positive Gamma, Negative Gamma, Gamma Risk

Options Crash Course: Ep #6  Trading Changes in Implied Volatility
As tastytrade’s Crash Course continues, we turn our attention to implied volatility. If [we revisit the BlackScholes Model,](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep2deconstructingoptionprices0909...
As tastytrade’s Crash Course continues, we turn our attention to implied volatility. If [we revisit the BlackScholes Model,](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep2deconstructingoptionprices09092020) we learn that the first derivative of the model with respect to volatility, [or vega,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/anintuitiveunderstandingofvega03242016) can show us how an option’s price will change when volatility does indeed change. From this, we see that long options will have positive vega and short options will have negative vega. Furthermore, the tendency for volatility to both contract and mean revert affords us some very distinct opportunities as premium sellers.
http://feeds.tastytrade.com/media/136701/OCC_200915_POD.mp3
Tue, 15 Sep 2020 13:29:00 0500
1718.997
Option Vega, Volatility Contraction, Volatility Mean Reversion

Options Crash Course: Ep #6  Trading Changes in Implied Volatility
As tastytrade’s Crash Course continues, we turn our attention to implied volatility. If [we revisit the BlackScholes Model,](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep2deconstructingoptionprices0909...
As tastytrade’s Crash Course continues, we turn our attention to implied volatility. If [we revisit the BlackScholes Model,](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep2deconstructingoptionprices09092020) we learn that the first derivative of the model with respect to volatility, [or vega,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/anintuitiveunderstandingofvega03242016) can show us how an option’s price will change when volatility does indeed change. From this, we see that long options will have positive vega and short options will have negative vega. Furthermore, the tendency for volatility to both contract and mean revert affords us some very distinct opportunities as premium sellers.
http://feeds.tastytrade.com/media/136700/OCC_200915_SEG.mp4
Tue, 15 Sep 2020 13:29:00 0500
1668.288
Option Vega, Volatility Contraction, Volatility Mean Reversion

Options Crash Course: Ep #5  The Natural Decay of Options
Option contracts offer a unique characteristic that cannot be found in any financial product  the natural decay of the asset itself. Due to the simple fact that options expire on a known date, their [extrinsic value](https://www.tastytrade.com/tt/show...
Option contracts offer a unique characteristic that cannot be found in any financial product  the natural decay of the asset itself. Due to the simple fact that options expire on a known date, their [extrinsic value](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep3extrinsicvalueextras09102020) is always decreasing as that date approaches, ceteris paribus. Therefore, as premium sellers who [focus on outofthemoney options,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/overcomingtheodds11302017) we can position our portfolios to take advantage of this phenomenon.
http://feeds.tastytrade.com/media/136668/OCC_200914_POD.mp3
Mon, 14 Sep 2020 13:08:00 0500
1341.672
Theta Decay, Extrinsic Value, Option Theta

Options Crash Course: Ep #5  The Natural Decay of Options
Option contracts offer a unique characteristic that cannot be found in any financial product  the natural decay of the asset itself. Due to the simple fact that options expire on a known date, their [extrinsic value](https://www.tastytrade.com/tt/show...
Option contracts offer a unique characteristic that cannot be found in any financial product  the natural decay of the asset itself. Due to the simple fact that options expire on a known date, their [extrinsic value](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep3extrinsicvalueextras09102020) is always decreasing as that date approaches, ceteris paribus. Therefore, as premium sellers who [focus on outofthemoney options,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/overcomingtheodds11302017) we can position our portfolios to take advantage of this phenomenon.
http://feeds.tastytrade.com/media/136667/OCC_200914_SEG.mp4
Mon, 14 Sep 2020 13:08:00 0500
1291.008
Theta Decay, Extrinsic Value, Option Theta

Options Crash Course: Ep #4  Profit, Direction, and Probability
To round out the first week of our Options Crash Course, we take a look at option delta  [a derivative of the BSM,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/differentiatingdelta09212017) and the one variable that can me...
To round out the first week of our Options Crash Course, we take a look at option delta  [a derivative of the BSM,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/differentiatingdelta09212017) and the one variable that can measure profit, direction, and probability, simultaneously. Once we understand that the textbook definition of delta shows us how an option’s price will move when the stock price moves, we then turn to understanding how delta measures our directional risk and [position probability.](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/overcomingtheodds11302017)
Specifically, delta can show us both the directional exposure of our option position, relative to a pure stock position, and it measures the probability of that specific option expiring ITM at expiration.
http://feeds.tastytrade.com/media/136633/OCC_200911_POD.mp3
Fri, 11 Sep 2020 13:43:00 0500
1653.957
Delta, POP

Options Crash Course: Ep #4  Profit, Direction, and Probability
To round out the first week of our Options Crash Course, we take a look at option delta  [a derivative of the BSM,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/differentiatingdelta09212017) and the one variable that can me...
To round out the first week of our Options Crash Course, we take a look at option delta  [a derivative of the BSM,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/differentiatingdelta09212017) and the one variable that can measure profit, direction, and probability, simultaneously. Once we understand that the textbook definition of delta shows us how an option’s price will move when the stock price moves, we then turn to understanding how delta measures our directional risk and [position probability.](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/overcomingtheodds11302017)
Specifically, delta can show us both the directional exposure of our option position, relative to a pure stock position, and it measures the probability of that specific option expiring ITM at expiration.
http://feeds.tastytrade.com/media/136632/OCC_200911_SEG.mp4
Fri, 11 Sep 2020 13:43:00 0500
1603.243
Delta, POP

Options Crash Course: Ep #3  Extrinsic Value Extras
After digging into [Intrinsic Value and Extrinsic Value a bit in Episode #2,](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep2deconstructingoptionprices09092020) we now want to dive deeper into Extrinsic...
After digging into [Intrinsic Value and Extrinsic Value a bit in Episode #2,](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep2deconstructingoptionprices09092020) we now want to dive deeper into Extrinsic Value. To do that, we begin with Intrinsic Value, which we learn is completely controlled by the [“moneyness”](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/moneyness07072016) of the option. From there, we can make the leap into appreciating the impact that both time and volatility have on extrinsic value.
At tastytrade, Extrinsic Value alone is arguably the most important concept across all of our strategies.
http://feeds.tastytrade.com/media/136603/OCC_200910_POD.mp3
Thu, 10 Sep 2020 13:36:00 0500
1987.776
Intrinsic Value, Extrinsic Value, Moneyness

Options Crash Course: Ep #3  Extrinsic Value Extras
After digging into [Intrinsic Value and Extrinsic Value a bit in Episode #2,](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep2deconstructingoptionprices09092020) we now want to dive deeper into Extrinsic...
After digging into [Intrinsic Value and Extrinsic Value a bit in Episode #2,](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep2deconstructingoptionprices09092020) we now want to dive deeper into Extrinsic Value. To do that, we begin with Intrinsic Value, which we learn is completely controlled by the [“moneyness”](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/moneyness07072016) of the option. From there, we can make the leap into appreciating the impact that both time and volatility have on extrinsic value.
At tastytrade, Extrinsic Value alone is arguably the most important concept across all of our strategies.
http://feeds.tastytrade.com/media/136602/OCC_200910_SEG.mp4
Thu, 10 Sep 2020 13:36:00 0500
1937.088
Intrinsic Value, Extrinsic Value, Moneyness

Options Crash Course: Ep #2  Deconstructing Option Prices
Yesterday, we kicked off the Options Crash Course, [by building the foundation that serves as the source to all option strategies  the option contract.](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep1theso...
Yesterday, we kicked off the Options Crash Course, [by building the foundation that serves as the source to all option strategies  the option contract.](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep1thesourceofallstrategies09082020) Well in that piece, we learned that the only floating variable that is pertinent to the option contract is its price, and today, we want to dive deeper into that price to uncover its inner workings.
To do that, we start with the governor to all things option pricing: [the BlackScholes Option Pricing Model.](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/theblackscholesmodelpartone07202017) In working through a basic overview of this model, we learn that option pricing is dependent on six different factors, all of which work together to build the probabilistic function that is the BSM. Then, we break option prices down into their two component parts: [intrinsic value and extrinsic value.](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/fromtheorytopractice09242018) While intrinsic value measures the inherent worth of the option, extrinsic value represents the added “premium” that is tacked on to establish the option’s price.
http://feeds.tastytrade.com/media/136574/OCC_200909_POD.mp3
Wed, 09 Sep 2020 14:19:00 0500
1449.835
Black Scholes, Intrinsic Value, Extrinsic Value

Options Crash Course: Ep #2  Deconstructing Option Prices
Yesterday, we kicked off the Options Crash Course, [by building the foundation that serves as the source to all option strategies  the option contract.](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep1theso...
Yesterday, we kicked off the Options Crash Course, [by building the foundation that serves as the source to all option strategies  the option contract.](https://www.tastytrade.com/tt/shows/optionscrashcourse/episodes/optionscrashcourseep1thesourceofallstrategies09082020) Well in that piece, we learned that the only floating variable that is pertinent to the option contract is its price, and today, we want to dive deeper into that price to uncover its inner workings.
To do that, we start with the governor to all things option pricing: [the BlackScholes Option Pricing Model.](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/theblackscholesmodelpartone07202017) In working through a basic overview of this model, we learn that option pricing is dependent on six different factors, all of which work together to build the probabilistic function that is the BSM. Then, we break option prices down into their two component parts: [intrinsic value and extrinsic value.](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/fromtheorytopractice09242018) While intrinsic value measures the inherent worth of the option, extrinsic value represents the added “premium” that is tacked on to establish the option’s price.
http://feeds.tastytrade.com/media/136573/OCC_200909_SEG.mp4
Wed, 09 Sep 2020 14:19:00 0500
1399.147
Black Scholes, Intrinsic Value, Extrinsic Value

Options Crash Course: Ep #1  The Source of All Strategies
In Episode #1 of our Options Crash Course, we trace everything back to the source  the option contract. Inside of an option contract between the long side and the short side, the strike price, expiration date, underlying stock, and quantity are all fi...
In Episode #1 of our Options Crash Course, we trace everything back to the source  the option contract. Inside of an option contract between the long side and the short side, the strike price, expiration date, underlying stock, and quantity are all fixed, whereas the price of the contract itself is floating.
Then we take a look at the transaction itself, which is [facilitated by the market maker,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/highfrequencyhelp05272016) or counterparty. The market maker stands ready to buy at the bid price or sell at the ask price, and serve as the other side to any order we might want to execute.
Lastly, we move through the [four basic option types:](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/thefourmostimportantoptionconcepts01282019) long call, short call, long put, and short put, with the gimmes and gotchas presented for each.
http://feeds.tastytrade.com/media/136539/OCC_200908_POD.mp3
Tue, 08 Sep 2020 13:23:00 0500
1793.685
Option Contract Features, Long Call, Short Call, Long Put, Short Put, Bid/Ask Spread

Options Crash Course: Ep #1  The Source of All Strategies
In Episode #1 of our Options Crash Course, we trace everything back to the source  the option contract. Inside of an option contract between the long side and the short side, the strike price, expiration date, underlying stock, and quantity are all fi...
In Episode #1 of our Options Crash Course, we trace everything back to the source  the option contract. Inside of an option contract between the long side and the short side, the strike price, expiration date, underlying stock, and quantity are all fixed, whereas the price of the contract itself is floating.
Then we take a look at the transaction itself, which is [facilitated by the market maker,](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/highfrequencyhelp05272016) or counterparty. The market maker stands ready to buy at the bid price or sell at the ask price, and serve as the other side to any order we might want to execute.
Lastly, we move through the [four basic option types:](https://www.tastytrade.com/tt/shows/fromtheorytopractice/episodes/thefourmostimportantoptionconcepts01282019) long call, short call, long put, and short put, with the gimmes and gotchas presented for each.
http://feeds.tastytrade.com/media/136538/OCC_200908_SEG.mp4
Tue, 08 Sep 2020 13:23:00 0500
1742.955
Option Contract Features, Long Call, Short Call, Long Put, Short Put, Bid/Ask Spread