Options course

Options are remarkably flexible tools that appeal to active investors. These 10 modules teach you how to magnify profits or protect your portfolio through buying or selling options.

Suitable for investors with some experience of owning and trading securities.

We welcome your feedback on this course.

Screenshot of Options Course 1

1. Introduction to options

An introduction to the basics of option trading. Why trade options? What are options, and who uses them? This module goes through the basic features of options, and explains how they differ from shares.

Estimated time to complete: 20mins.

Introduction to options - text version (pdf 336.46KB)

Screenshot of Options Course 2

2. What are options?

A more detailed look at what is in an option. This module explains the difference between call and put options, and discusses the main features of options traded on ASX, including exercise price, expiry, and exercise style.

Estimated time to complete: 20mins.

What are options? - text version (pdf 813.93KB)

Screenshot of Options Course 3

3. Option pricing

How much is an option worth? This module looks at the influences on an option's price. We explain the difference between intrinsic value and time value, and discuss the influence of variables such as volatility and time to expiry. We also look at the central importance of time decay in option trading.

Estimated time to complete: 20mins.

Option pricing - text version (pdf 615.65KB)

Screenshot of Options Course 4

4. Choosing the right option strategy

A basic guide to the things you need to think about when developing your option strategies. This module discusses some of the differences in approach between share investing and option trading. We explain how you can develop more effective strategies by taking into account volatility and time as well as price movements.

Estimated time to complete: 20mins.

Choosing the right option strategy - text version (pdf 516.12KB)

Screenshot of Options Course 5

5. Profit from a rising share price

A look at how you can use options to trade your view that the market will rise. The bought call gives you leveraged exposure to a share price rise, and enables you to lock in the maximum purchase price for shares. This module discusses potential profits and losses, explains how to choose between the different calls on offer, and looks at your choices once you have bought your call.

Estimated time to complete: 20mins.

Profit from a rising share price - text version (pdf 653.22KB)

Screenshot of Options Course 6

6. Profit from a falling share price

How can you make money when you think share prices will fall? This module explains how put options give you the possibility to profit on the way down. We look at the risks and rewards of the bought put, and explain how to choose between the available options.

Estimated time to complete: 20mins.

Profit from a falling share price - text version (pdf 682.13KB)

Screenshot of Options Course 7

7. Protect your shares

Using options to protect your shares. Put options enable you to protect your shares from a fall in value without having to sell them. This module explains how you can lock in a minimum sale price for your shares. We explain the benefits and costs of the protective put, and how to put the strategy in place.

Estimated time to complete: 20mins.

Protect your shares - text version (pdf 583.91KB)

Screenshot of Options Course 8

8. Earn income from your shares

Shares generally produce little value in flat markets. This module explains how you can write call options to work your portfolio harder. Writing covered calls generates income in the form of option premiums and can be a profitable strategy in neutral markets.

Estimated time to complete: 20mins.

Earn income from your shares - text version (pdf 678.62KB)

Options Course 9

9. Index options

Index options allow you to trade the whole market in one transaction. ASX offers options over three share price indices, giving you broad exposure in one trade. This module explains how you can use index options to get leveraged exposure to a rising or falling market, or to protect a diversified portfolio from a fall in value.

Estimated time to complete: 20mins.

Index options - text version (pdf 780.81KB)

Screenshot of Options Course 10

10. How options are traded

The mechanics of trading options. This module explains how the options market works. We look at how options are traded, cleared and settled, and point out the differences from, and similarities to, share investing. We discuss the role of market makers, explain the process of exercising an option, and give a few pointers on finding a broker.

Estimated time to complete: 20mins.

How options are traded - text version (pdf 1130.31KB)