Call Options for Beginners (2024)

Рет қаралды 38,371

Күн бұрын

✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
💰 Get up to $3,000 when you open and fund your first tastytrade brokerage account: geni.us/tastytrade
🔥 Learn data-driven options strategies: optionsforbeginners.teachable...
💻 Maximize your trading with TrendSpider's advanced charting tools and scanners: geni.us/trendspider
Learn the absolute essentials of call options in this "zero to hero" crash course!
In this video, you will learn the basics of call options, how traders make money buying and selling them, why causes call option prices to change and see a real AMZN call option trade entry and exit demonstration using real brokerage software.
0:00 Intro
0:11 What is a Call Option?
1:16 How Do Call Buyers Make Money?
3:19 Why Do Call Option Prices Move with the Stock Price?
4:50 Intrinsic Value Explained
5:59 Expiration Breakeven Price Explained
6:51 Extrinsic Value Explained
9:57 Call Prices vs. Volatility Expectations
13:01 Call Prices vs. Time to Expiration
16:37 REAL Call Option Entry Demonstration (AMZN)
23:54 REAL Call Option Exit Demonstration (AMZN)
30:30 What Happens at Expiration?
What is a call option?
A call option is a financial contract that grants the buyer/owner the right, but not the obligation, to buy an asset at a fixed price between now and the option's expiration date.
How do call option buyers make money?
Call option buyers make money by purchasing call options and selling them at higher prices, which stems from an increase in the stock price and/or an increase in the expected volatility of the stock.
Why do call prices move with the stock price?
Since the call buyer can purchase shares of stock at a fixed price (the strike price), the value of that ability will grow as the stock price increases and fall as the stock price declines.
How do call prices change vs. volatility expectations?
If the market expects more volatility from a stock going forward, the market bids up the option prices since larger stock price movements can lead to higher option valuations than smaller stock price movements.
How do call prices change vs. time to expiration?
As time passes, a call's extrinsic value will decay toward zero as the option's expiration value becomes more certain. With lots of time to expiration, options will be expensive since there's lots of time for the stock price to make a big move and cause options to become more valuable. With less time to expiration, options will be cheaper since there's not much time left for the stock price to move and cause options to become more valuable.
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I hope this video helped! Please leave me video feedback and questions down below! :D
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Disclaimer: Nothing contained in our content constitutes a solicitation, recommendation, promotion, or endorsement of any particular security, other investment product, transaction, or investment. Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involve substantial risk of loss and are not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not necessarily indicative of future results. I am not a financial advisor. The ideas presented in this video are for entertainment purposes only. You (and only you) are responsible for the financial decisions that you make.
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Пікірлер: 107

@projectfinance Жыл бұрын

Huge project! I hope this video explanation helped you better understand how call options work. ✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf -Chris

@american_woman Жыл бұрын

Thank you!! I've been hoping to see more content from you in 2023. I really want to learn this.

@projectfinance Жыл бұрын

You got this! More videos to come :D

@Agooo13431 Жыл бұрын

Welcome back, Chris. You are the best option teacher of all time, IMO. I have been trying a lot of option strategies. I am having a lot of success with debit call vertical spreads in bullish trends. Still struggling to find the optimal option strategy for bearish trends. ITM puts are too risky and lose too much in bear rallies. Debit put spreads are not mirror image to debit call spreads. They underperform on the short run with crashes, because the rise in IV with crash limits profit potential. What are your thoughts?

@karthikramanathan5390 Жыл бұрын

Thanks for doing a video specific to call options. A minor correction: I noticed that price is spelled as prive (v instead of c) at 6:00

@projectfinance Жыл бұрын

@@karthikramanathan5390 thanks! Can’t do anything about it now 🙁 always miss something in all these graphics

@AfinaGatita 7 ай бұрын

Out of all the videos I watched. You explained this the best 😄🤗thanks

@projectfinance 7 ай бұрын

Glad to hear that and thank you for watching and letting me know!

@MHN212 Жыл бұрын

Hey Chris, at your convenience, can you make more videos tailored to determining the best entry point for long-term short option sales? I really enjoyed your video on the VIX compared to other volatility indices and I would like to learn more on that topic including how best to lookup short, medium, and longterm volatility.

@ttrevino1314 13 күн бұрын

Thank you for sharing this. I need a new refresher summer brain drain with kids I guess😒 thank you for always updating your videos for beginners. Your top-notch.👍🏻

@projectfinance 12 күн бұрын

Thank you! better videos coming soon!

@HefTrade Жыл бұрын

I know you work hard on making these videos, Chris! Although I understand and apply all these concepts, I am still interested in watching every video from start to finish. Great work as always. I regularly recommend your vids to newbie on reddit so I hope to see you get to 500K subs soon!

@projectfinance Жыл бұрын

Thank you Evan! Yes, the past two videos were huge projects. I appreciate you watching this video even though you know the stuff. I added a lot of visuals and explanations in this video from the last 'calls for beginners' video many years ago. Thanks so much for your support!

@mrdude3691 Жыл бұрын

Very clear and easy to follow. You're a very good teacher. Thanks for posting these!

@projectfinance Жыл бұрын

Thank you for watching and the comment! I appreciate the feedback.

@SuperMassman Жыл бұрын

Watching ALL your videos now,, 1, 2, 3 etc,, but don't know enough to take your course, YET. Will be taking it in the future

@napalm5 Жыл бұрын

This is such a good video for explaining things. You have a gift for teaching.

@projectfinance Жыл бұрын

Thanks so much!! 😀

@vister6757 Жыл бұрын

@@projectfinance I agree that you explained this very well.

@philippwun7187 Жыл бұрын

Great video and lot of work in it as always! I wanted to ask you if you could make a video on black-swan hedging via put-ratio-backspreads for someone who just selling CSP vs. credit spreads vs. teenies? Something in that direction would be awesome!!

@melcapone54 Жыл бұрын

Thanks. This has been my best example of option trading to date. Very detailed and easy to understand. Thanks again.

@projectfinance Жыл бұрын

Thank you Melvin! I’m glad it was a great help to you!

@mikedeee6968 9 ай бұрын

Excellent video, I’m curious why Tasty rarely shows the percentage of the actual stock price?

@projectfinance 9 ай бұрын

Thank you! What do you mean exactly by the % of the stock price? What metric are you interested in seeing?

@mikedeee6968 9 ай бұрын

@@projectfinance, Referring to the basic stock price and dollar change, they are there, but not the percentage move for the day. I noticed Tasty rarely has the % on the screen, I believe it's only in one place. Even when Tony says to Tom a stock moved $8 dollars, we don't know the percentage move unless you know the stocks price. Hope that makes sense.

@camillapham7356 Ай бұрын

Thank you, Chris

@oidbio2565 7 ай бұрын

Hey Chris. Hope you don’t mind a quick recommendation on your excellent videos. It would be fast to do (me thinks) after stating any question, add a freeze frame and in that frame add “pause video to answer question yourself”. Then when the viewer starts the video again, they can compare what they thought the answer was to your answer. I do it anyways but sometimes it’s hard to catch before the answer is given. Thanks again for your clarity of explanation!

@AscendwithJaclyn Жыл бұрын

This is incredibly helpful! Thank you for walking us through your real life long call as an example. 👍🏽

@projectfinance Жыл бұрын

Thank you for the feedback! I figured the real example would help a lot.

@sam5605 Жыл бұрын

Chris, would really appreciate if you could do a video regarding which one is better if you were bearish: bear put spread or bear call spread based on IV...etc.. thanks

@devek357 Жыл бұрын

you're so good at making me understand the process! Thank you

@projectfinance Жыл бұрын

Happy to help!

@corleoniee2760 Жыл бұрын

This video has made me understand call options in trading. Option trading is gradually getting popular in the crypto market and with the recent Lyra listing on MEXC global and their The Newport upgrade that allowed Lyra MMVs to partially collateralize short positions with cash which removes the need to swap to the base asset and instead using perpetuals to collateralize and delta hedge.

@user-ig9fq1fi5q Жыл бұрын

Keep Teaching, I'll keep learning, Thanks.

@Mohsemsem Жыл бұрын

There is no doubt that the explanation is quite clear, however, if the lecture goes a little slower and like conversation type. Sometime there''s no time to think and you just move ahead assuming we all understood.

@CinoNkwana 3 ай бұрын

Thank you for all your information. I have a question, what broker do you use for trading options?

@huplim Жыл бұрын

Thank you Chris! ❤️

@projectfinance Жыл бұрын

You're welcome!

@kathleentonn-oliver8836 3 ай бұрын

Chris: I'm bewildered by your examples at 4:19 and at 5:30; your diagrams in both places are labeled "105 Call", but the 105 call is never mentioned in the discussion. How is the 105 Call involved with the trade? What am I missing? [Next, at 6:01, the topic is labeled with "Prive" rather than "Price".]

@patrickvonjanicke658 4 ай бұрын

Great video! ? What is the significance of Friday ?The preferred day to buy ?

@prej1741 Жыл бұрын

Thank you so much 🙏

@projectfinance Жыл бұрын

You're welcome 😊

@mariocollado5072 Жыл бұрын

Thank you so much for this excellent video !! I'd like to see in a coming video and explanation about the Greeks. Thanks in advance.

@projectfinance Жыл бұрын

Great suggestion! Thanks for watching and commenting feedback!

@mindixit1823 Жыл бұрын

Thanks for detail explanation and keep repeating so I understand.

@projectfinance Жыл бұрын

You're welcome! It's all about repetition

@saso7866 Жыл бұрын

Hi Chris, do you know when your Options trading for beginners course will be ready ?

@dkct2010 Жыл бұрын

good stuff thanks

@Okamoto1 Жыл бұрын

Thank you.

@projectfinance Жыл бұрын

You're welcome thanks for watching!

@iaredabestani Жыл бұрын

what are the expiration/assignment rules For options that are expiring on Friday, for example if I sold a put for a strike price 1.5 and it closed at 1.49 but after hours it goes 1.5 , will I get assigned on Monday because it closed at 1.49 or it will expire worthless and i collect the premium since after hours it went to 1.50?

@v3nkattrader684 Жыл бұрын

Awesome, Bro, keep going ,,,

@taucer16 Жыл бұрын

Chris, on your website I see a beginners course with exercises "coming soon", is this no longer available?

@justinmirche Жыл бұрын

Great video!

@projectfinance Жыл бұрын

Thanks!

@Sisu0316 Жыл бұрын

Great easy to understand video - Ok - I understand the basic concepts - Do you have a live class or just the videos ?

@projectfinance Жыл бұрын

I have old “live” stream videos on my channel which you can find by going to my videos and filtering for live content.

@Sisu0316 Жыл бұрын

@@projectfinance - thanks so much for your reply- I will definitely check out your site. 😀

@FIRE_AtTheBeach Жыл бұрын

Can you do a video explaining pros and cons buying long OTM calloption and selling weekly cover call on it?

@christopherveilleux3760 Жыл бұрын

Great explanation! watching as many of your videos I can. I assume for higher profits, you want high volume and decent volatility? Because waiting 39 days to make $280 isn't ideal, but was a good example to showcase everything.

@projectfinance Жыл бұрын

High vol means the stock moves around a lot more and isn’t necessarily better than low vol when selling options. My research (and others) has found the opposite. It’s also good to keep expectations realistic. Not making “enough” money in a time period is a common pitfall that nudges traders into riskier bets that can cause big losses with a high probability.

@ruizjesse4930 Жыл бұрын

Anywhere to contact you directly ?

@bharanitharanii5229 Жыл бұрын

What kind of app is easy for option trading

@gsjonline Жыл бұрын

Hi Chris, What about the option cost 1200$, do you have to pay it as soon as you place the trade or you have to pay only a portion for the 39 day you had the trade opened? when do you exactly have to pay this option cost, when you place the trade or when you close the trade or on daily basis?

@projectfinance Жыл бұрын

You pay it immediately to open the trade. Then the value of the option fluctuates after you enter. If the option price is higher later you can sell it for a profit. If not, you lose money.

@gsjonline Жыл бұрын

@@projectfinance Is this same with all the trading platforms? IBKR etc?

@projectfinance Жыл бұрын

@@gsjonline Same idea and steps but different interface

@aimen880 Жыл бұрын

Outstanding presentation

@projectfinance Жыл бұрын

Thank you! 🙏🏼

@SarTakeOver Жыл бұрын

No lie the breakdown is always made so easy to understand like he doesn't overcomplicate he doesn't over do it - true goat

@1030frankc Жыл бұрын

question is the strike price? the price i must sell at or can it go over and i can sell there? or can i only sell at the strike price lets say $100 $ not over or under that price?

@williams11372 Жыл бұрын

You can sell over the strike price.

@LMF-ct4lt Жыл бұрын

Can you set the option to sell automatically if you reach a certain gain, a certain loss, or by a certain date?

@projectfinance Жыл бұрын

Yes, you can set an order to sell your call option at a specific price. The specific date might be a bit harder and probably requires using the brokerage API (if available) to create auto-trading strategies.

@markdailey8526 Жыл бұрын

Project, what makes the value of a option contact double? I do know that a contract can increase to move of a delta to about a dollar but can double at certain points. Do you know why this occurs?

@projectfinance Жыл бұрын

An option contract increases in price a lot (2x, 3x, whatever) when the likelihood of it expiring in the money increases dramatically. In the case of calls, that means an increase in the stock and/or big increase in volatility expectations (synonymous with a big increase in option prices not driven by a stock price change).

@markdailey8526 Жыл бұрын

@@projectfinance thank you sir for your explanation!

@rajivthakur4594 Жыл бұрын

Do we have to buy stock if we don't sell the option on the expiration date?

@projectfinance Жыл бұрын

If it's in-the-money and you hold it through expiration, you'll auto-buy 100 shares per call contract at the call's strike. Example: you have 7 contracts of the 100-strike call and the stock is $105 at expiration. You hold the options through expiration. You will automatically purchase 700 shares of stock at $100/share, or $70,000 in total stock value. It doesn't matter if your portfolio is worth $10,000. You will autopurchase the shares and be left with a massive negative account buying power and need to close the shares immediately, or your brokerage will do it for you. However, it's worth mentioning that some brokers will automatically close ITM/near-the-money options on expiration day to avoid this situation.

@MrSlackyni Жыл бұрын

Hi, I have IBKR cash account. Don't like margin accounts, I like to work with my own money. I had an intention to buy calls the way you explained, without shorting other calls. On the IBKR there's somthing I don't understand and it's called "legs" Can i just buy calls and see how it's going to play out? Thanks

@MrSlackyni Жыл бұрын

I have enough funds (over 25k) for option trading

@Nice-Y Жыл бұрын

I remember you saying that it's preferable for the IV to go down once a strike is ITM.

@projectfinance Жыл бұрын

That’s for long call spreads when the stock price goes to the short calls strike. At that point you want IV to go down as the spread will increase in price from the extrinsic coming out of the short. For a long call by itself you always want IV to go up.

@Nice-Y Жыл бұрын

Thank you!

@jsilva3rd Жыл бұрын

10:12 the dude called himself a numnut in his review LMAOOO 🤣🤣🤣🤣🤣🤣

@marioc485 Жыл бұрын

Do you ever sell puts? Or you are only buying calls?

@dennishoogerman2255 Жыл бұрын

I am a beginner. What trading platform do you recommend?

@projectfinance Жыл бұрын

tastytrade: info.tastytrade.com/tasty-offer? They have awesome options trading commissions and features. Simple platform to learn even though it will take time to learn any platform. If you sign up and fund your account with the above link you can get their funding bonus + free access to my paid course if you're interested! Chris

@dmircea5 Жыл бұрын

So let's say apple is at$150? And I think it will go to 200 in six months. Is it better to buy a call at 150 which I think is called a in the money or is it better to buy a call at 200? Which will give me the most money?

@projectfinance Жыл бұрын

Technically if the stock goes from $150 to exactly $200 at the end of 6 months, the 200 call will expire worthless since the stock isn't above $200. But if you bought the 200 call and the stock went from $150 to $170 or $190 within the first month or two, you could make a lot of money (as seen in the AAPL example with the OTM 180 call). So of the two approaches, the 150 call would be the safer bet to make if you thought the stock was going to $200 in 6 months, but you'll pay a higher price for the 150 call than the 200 call since it has a much higher probability of expiring with value.

@traderHomepage Жыл бұрын

😊😊😊😊😊😊

@alokverma1792 Жыл бұрын

Next video should be on Put Options.

@projectfinance Жыл бұрын

Yes I need to do that video soon!

@torowazup1 Жыл бұрын

👍🏼👍🏼👍🏼👍🏼👍🏼👌🏼🎉🤓

@everymickle1278 Жыл бұрын

Why does your voice sound so different? I like your "old" voice more. it was easier on the ear and you also spoke a little slower.

@projectfinance 11 ай бұрын

I'm sorry to hear that! Can you please send me a video example of one the voice sounds better so I can compare them and see what I can do? If you are willing, I would appreciate it.

@derekaugust872 Ай бұрын

Confused here…you risked 1,200 dollars for a profit of 285? That don’t sound like much of a good risk to me? What am I missing?

@SarTakeOver Жыл бұрын

Can I get permission to download your videos to watch offline 🤔

@projectfinance Жыл бұрын

Go for it!

@SarTakeOver Жыл бұрын

Thank you

@samuelgandarachmat3215 Жыл бұрын

Why tastytrade? Why not thinkorswim? Does tastytrade has better option analytic tool than thinkorswim, especially probability of profit feature that thinkorswim doesn't have?

@mrdude3691 Жыл бұрын

Very clear and easy to follow. You're a great teacher. Thanks for posting these!

@projectfinance Жыл бұрын

Thanks so much!! I appreciate the feedback.