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Advancing in options

This course will extend your knowledge of options trading beyond the introductory course. Learn about multi-legged strategies, margins and option pricing in detail.

The course material is advanced and would suit those with options trading experience.

We welcome your feedback on this course.

Advancing in options - quiz

Before you start this course – test your knowledge

Check your knowledge of options before you start this course.

Estimated time to complete: 10 mins.

Advancing in options - introduction

1. Advancing in options - introduction

Most strategies in this course involve more than one 'leg'. A leg is an option position (such as a short call) or a stock position.

Estimated time to complete: 20mins.

Advancing in options - introduction - text version (pdf 963.90KB)

Option pricing in detail

2. Option pricing in detail

Get a recap on the fundamentals of options pricing before exploring detailed information on volatility and the Greeks.

Estimated time to complete: 25mins.

Option pricing in detail - text version (pdf 1742.48KB)

Writing options and margins

3. Writing options and margins

The leveraged strategies in this course require margins to be paid. Learn about risk margin, premium margin and offsets.

Estimated time to complete: 25mins.

Writing options and margins - text version (pdf 1000.70KB)

Implementing multi-legged strategies

4. Implementing multi-legged strategies

Multi-legged strategies involve two or more option legs or a combination of a stock position and one or more option legs. However when placing the strategy you should think of it as one integrated position, rather than thinking of the component legs. Learn about entering and exiting your strategy as well as dealing with your broker.

Estimated time to complete: 25mins.

Implementing multi-legged strategies - text version (pdf 1017.28KB)

Strategies for a moderate price increase

5. Strategies for a moderate price increase

The bull spread offers a way of gaining exposure to a moderate rise in the share price but for a lower cost than the taken call. Unlike the taken call, your upside is capped.

Estimated time to complete: 25mins.

Strategies for a moderate price increase - text version (pdf 975.03KB)

Strategies for a moderate price decrease

6. Strategies for a moderate price decrease

The bear spread offers a way of gaining exposure to a moderate fall in the share price but for a lower cost than the taken put.

Estimated time to complete: 25mins.

Strategies for a moderate price decrease - text version (pdf 985.28KB)

Strategies for price break-outs

7. Strategies for price break-outs

Assume you hold a view that a stock is about to move significantly - but you do not know which direction. The straddle and strangle are two strategies that enable you to profit if there is a breakout in either direction.

Estimated time to complete: 25mins.

Strategies for price break-outs - text version (pdf 974.19KB)

Strategies for a flat market

8. Strategies for a flat market

The written straddle and written strangle both generate income if the stock price remains steady. Both strategies are high risk, with the possibility of heavy losses if the stock price moves significantly.

Estimated time to complete: 25mins.

Strategies for a flat market - text version (pdf 1133.14KB)

Damage control

9. Damage control

This module looks at a strategy that can be implemented to help recover from a losing stock position. The strategy is best placed when the stock has fallen moderately from your purchase price – if it has fallen too far, it is unlikely this strategy will enable you to break even.

Estimated time to complete: 25mins.

Damage control - text version (pdf 759.73KB)

Cheaper stock or extra cash

10. Cheaper stock or extra cash

The written put is a strategy that can be used to purchase stock cheaper than its market price or generate extra cash. The strategy carries the risk of having to pay more than the market price for the stock at the time of exercise.

Estimated time to complete: 25mins.

Cheaper stock or extra cash - text version (pdf 885.87KB)