Equity Option Trading

Course Title: Master in Equity Options Trading

Duration: 1 Month (20 Sessions)
Holidays: Saturdays and Sundays
Focus: Practical exercises and real-world applications

Week 1: Introduction to Equity Options Trading

• Day 1: Overview of Options Trading
  • Introduction to equity options and key concepts
  • Understanding options terminology (e.g., strike price, premium, expiration)
• Day 2: Call and Put Options
  • Differences between call and put options
  • Practical examples of buying and selling calls and puts
• Day 3: Options Payoff and Breakeven
  • Calculating payoff for call and put options
  • Identifying breakeven points in options trading
• Day 4: Options Greeks Basics
  • Introduction to Delta, Gamma, Theta, Vega, and Rho
  • Importance of Greeks in option pricing and strategy selection
• Day 5: Practical Exercise – Basic Options Trades
  • Hands-on practice with buying and selling calls and puts
  • Analysis of hypothetical scenarios and profit/loss

Week 2: Options Pricing and Volatility

• Day 6: The Black-Scholes Model
  • Explanation of the Black-Scholes options pricing model
  • How it applies to real-world options pricing
• Day 7: Implied Volatility and Historical Volatility
  • Importance of volatility in options trading
  • Calculating and interpreting implied vs. historical volatility
• Day 8: Intrinsic and Extrinsic Value of Options
  • Understanding the intrinsic and extrinsic components of option prices
  • Practical calculation of option value components
• Day 9: Time Decay in Options (Theta Decay)
  • Exploring the impact of time on options value
  • Strategies to benefit from time decay
• Day 10: Practical Exercise – Pricing and Volatility Analysis
  • Hands-on practice in analyzing option prices with different volatilities
  • Role-playing different market scenarios to predict price movements

Week 3: Options Trading Strategies

• Day 11: Basic Strategies – Long and Short Options
  • Long call and put, short call and put
  • Risk-reward profile for each strategy
• Day 12: Spreads – Bull and Bear Spreads
  • Vertical spreads: Bull Call Spread and Bear Put Spread
  • Practical applications and scenarios for each spread
• Day 13: Straddles and Strangles
  • Market-neutral strategies using straddles and strangles
  • Calculating potential profits and losses for volatile markets
• Day 14: Advanced Strategies – Iron Condor and Butterfly
  • Building iron condor and butterfly spreads
  • Risk management and potential profits in low volatility markets
• Day 15: Practical Exercise – Strategy Simulation
  • Simulated trading sessions to apply learned strategies
  • Analyzing results and refining approach based on outcomes

Week 4: Risk Management and Advanced Applications

• Day 16: Risk Management in Options Trading
  • Techniques to manage risk in options trading
  • Hedging and protective strategies
• Day 17: Portfolio Diversification with Options
  • Using options to diversify and protect a portfolio
  • Balancing options with other assets for a well-rounded portfolio
• Day 18: Options Expiration and Assignment
  • Key considerations at expiration
  • Handling assignment and expiration risks
• Day 19: Practical Exercise – Portfolio and Risk Management
  • Simulating portfolio diversification using options
  • Managing risk in hypothetical portfolios
• Day 20: Review and Q&A Session
  • Recap of key topics and strategies
  • Addressing questions and clarifying complex topics
  • Final practice test to reinforce understanding