Option Greeks Explained for Beginners
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- Опубліковано 11 чер 2024
- Master your understanding of the Option Greeks with helpful examples, visualizations, and logical explanations!
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Master your understanding of the Option Greeks with helpful examples, visualizations, and logical explanations!
The option greeks are critical to learn as a beginner options trader because the greeks tell you the risks your option positions are exposed to.
Option prices, and therefore, your profits and losses, change with the stock price, expected volatility, and passage of time.
The four primary option greeks are delta, gamma, theta and vega.
Delta estimates how an option's price changes relative to a $1 change in the stock price.
Gamma estimates how an option's delta changes relative to a $1 change in the stock price.
Theta estimates how an option's price will decay with the passing of each day, assuming the stock price and implied volatility remain constant.
Vega estimates how an option's price will change relative to a 1% shift in implied volatility or expected stock price fluctuations.
The greeks can be viewed from the perspective of an individual option or an entire complex option position (position greeks).
In this video, I'll explain the option greeks in detail, including helpful examples and data visualizations to help you deepen your understanding of these risk measurements.
0:00 Intro
0:15 Delta: Option Price vs. Stock Price
2:35 Gamma: Option Delta vs. Stock Price
5:34 Another Way to Think About Delta & Gamma
7:07 Theta: Option Price Decay
8:13 Vega: Option Price vs. Expected Stock Volatility
10:46 Individual Option Greeks vs. Position Greeks
13:43 Theta & Vega ONLY Impact Part of an Option's Price
14:35 Learn Data-Driven Options Strategies
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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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✅ 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
I am trying to learn options and found this! You are an absolute great teacher!! Thank you so much. Looking forward to more videos from you.
This is the best explanation of greeks I have seen yet. Very well done. Thanks for the information.
This is by far the best channel on options on youtube. Thank you for making these videos!
The best, clearest and simplest explanation of technical concepts. Super awesome and thank you!!
Glad it was helpful!! Thanks for the kind comment
Great Video as always - This is the Video to "PIN"/bookmark to quickly refer to when you need to understand any Greek. Thanks for creating a cheatsheet version of a video explaining Greeks.
goated video, when i was younger i always had trouble understanding this. this makes it so simple.
Thank you for a very clear explanation of the Greeks.
.
The best to explain Greeks from all the other vids I saw
Thanks for the information. Great job.
Another fabulous video, thanks Chris!! I've generally used Delta as a way to gauge probabilities, selling spreads with a Delta of +/- 0.25. But with the recent two week bull run in stocks, the Deltas in my credit spreads have substantially increased causing significant losses.
Another great video Chris. So far, could not find anyone explaining options better. Thank you.
Thank you! I just spent a ton of time creating an Options Trading for Beginners PDF (170+ pages now) that includes my best explanations/visuals explaining key options trading concepts and strategies. Check it out: www.dropbox.com/scl/fi/g7d402wnapqexq344ct73/options-trading-for-beginners-aug15-v1.pdf?rlkey=dort61xyaz1rubndbwbqmhd5i&dl=0
If you want updates to the PDF over the coming months/additional learning resources, consider dropping your email on the page here: geni.us/options-trading-pdf
@@projectfinancewow thanks man this is huge and ìt looks really in depth and professional really appreciate it!
That was so clear. No BS just simple easy to understand facts. Thanks mate.
No problem 👍 thanks so much for the comment
Excellent video!
Thanks for that very clear and informative video. Love your work.
Thanks for watching!
Brilliant 👍 I'll be signing up for sure to driven-data
What a well presented video, so easy to understand and a lovely smile
Thank you! 🙏🏼
Chris!!! Thank you for making such Informative Videos.
Glad you like them!
This was absolutely AMAZING 🤩
Glad you thought so! Thanks for the comment!
Chris great to see you back! Do you offer a discord?
I love your videos. Whenever I have options questions I come here first to see if you have already done a video on that topic. With that said, if you take suggestions, I would love to see a video explainers on the topic of a gamma squeeze.
Sure thing! Thanks for the suggestion and feedback! I appreciate your views and support!
@@projectfinance You are the greatest man, thank you.
very helpful
Thank you!
Where is your options course link at I'm interested in buying it
As always very well enplaned and I understand them it unfortunately its still Greek to me and still can't get a long call to work out
Best explication as always.
Thank you! I'm glad you think so! I appreciate you taking the time to watch and leave a comment.
@@projectfinance I'm so amazed you replied my comment 😨 thank you.
Can they be used to filter and find good options to trade? Anyone knows any tools or guide lines on how to use Options Greeks for entering a trade either long or short? Kind of what values to look for in each or all of them to enter or exit a trade?
Thank you! ❤
I’ve been waiting for this
❤️ from Malaysia!
You're welcome and I'm happy this is a topic you've been wanting! Let me know what you think after watching if you have any feedback. I'd appreciate it :D
Can you test selling an iron condor daily. SPX. Let it expire. 1/3 with of the strikes. I would appreciate this . We all would. Greetings from Guatemala.
Anyone knows any tools or guide lines on how to use Options Greeks for entering a trade either long or short? Kind of what values to look for in each or all of them to enter or exit a trade?
I am new at this and I’m trying to figure out how to get the Delta and where is this data for Delta??
I saw your video and thought id ask. I had a put option contract with a $30 theta. I held it overnight, and the next day the stock dropped 20 points. Sonehow i was still negative on the contract. My broker is saying it has something to do with the theta and gamma, but from your video it doesn't seem at all likely. Do you have a possible explanation or was i just robbed ?
Little confusing on Gamma, please can you show one more video
I’m learning…
You missed one of the Greek which is RHO
I just found your channel. You have the same last name and sound a lot like Mike Butler at Tasty. Are you related? You could be brothers. Hmmm.
Yes he is my older brother!
Qullamaggie now doing Options
Oh man I’ve been waiting on this one…I love your videos and send them to anyone who’s trying to learn about options 😊Thank you
Thank you for sharing! I'm glad this one was a timely topic! Let me know what you think after watching please. I'd greatly appreciate your feedback.
this was so confusing. glad everyone got it. where's the 5th grader explanation
I thought delta meant the percentage that the strike will end in the money? That’s what everyone else is saying
The main thing delta represents is the option's price change vs. a stock price change.
The probability of the option expiring ITM is the secondary usage of delta.
The "Delta" of the stock can be derived from N(d1) from the Black Scholes model, which is the probability of a call expiring in the money. You can also use N(d2) to figure out how much you'd have to borrow to make a replicating portfolio. From my understanding, N(-d1) is the likelihood a put expires ITM which is 1-N(d1).
But it's cool because these are values that are modeled from a normal distribution curve and is heavily tied to physics.
Speaking too fast for my brain to calculate wtf is being said lol.. I've just barely got the understanding of how calls/puts fully work and the premium etc... now this ha. Its never ending.
Edit: I'm not hating on your video. I have a learning disability since I was a kid. So it makes things a pain in the ass to learn. pisses me off lol
Hey I hear you and I apologize for the pace. Have you tried slowing down the playback on UA-cam? I can create a pdf of this video too and post the link in the description in a couple days.
Let me know if you have things I can help clarify
You’re literally SOOO HANDSOME
Same. No homo
Weirdcore
Gaayy 😂
He is handsome :-)
First!
So fast!
@@projectfinance lol my UA-cam routine is how I unwind after work. Hope you're having a good day.
@@projectfinance I also saw TastyTrade will have an API soon. It would be great to see a video of how to use it.
Completely lost lol