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Option Basics and Fundamentals

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Option Basics: -Options are contracts -You pay a premium for them -You are able to buy or sell stock -1 option = 100 shares -They expire the third Friday of the month you purchase them for -Strike price = expiration price -You pay a premium -The option gets traded and sold versus the stock -Most people just trade the contracts Example: -Think of options like buying a house -You find a house that you like in an area where the houses are selling for $150k. You knock on the door and ask to buy the house. You are willing to give $10k up front if the house is sold to you within 6 months for $200k. -It is a win-win situation. -The homeowner gets the $10k and you get the option to purchase the house in the future and you can do research to check if the area is actually developing. -You have the right, but not the obligation to purchase the house. You pay $10k in order to have the option to buy it. -If someone gave the homeowner a higher bid, the homeowner would not be able to sell the house because you have the legal right to buy it in the future for $200k. -The homeowner would have to buy out the contract with you before selling the house for $300k. Types of Options: 1. Call - You are expecting the stock to go up 2. Put - You are expecting the stock to go down ★ SUBSCRIBE TO MY YOUTUBE: ★ http://bit.ly/addtradersfly ★ ABOUT TRADERSFLY ★ TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing. Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better. Stock trading and investing is a long journey - it doesn't happen overnight. If you are interested to share some insight or contribute to the community we'd love to have you subscribe and join us! STOCK TRADING COURSES: -- http://tradersfly.com/courses/ STOCK TRADING BOOKS: -- http://tradersfly.com/books/ WEBSITES: -- http://rise2learn.com -- http://criticalcharts.com -- http://investinghelpdesk.com -- http://tradersfly.com -- http://backstageincome.com -- http://sashaevdakov.com SOCIAL MEDIA: -- http://twitter.com/criticalcharts/ -- http://facebook.com/criticalcharts/ MY YOUTUBE CHANNELS: -- TradersFly: http://bit.ly/tradersfly -- BackstageIncome: http://bit.ly/backstageincome
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Text Comments (41)
Randall Gordon (4 months ago)
The scariest part about trading options is getting assigned the stock.
Randall Gordon (4 months ago)
yep. I've lost money on every put I've managed. I guess I need more experience.
Investor Jess (8 months ago)
You’re so helpful! Thank you so much!
Jash Vora (1 year ago)
JUST A QUICK QUESTION IN OPTIONS IS MY PROFIT CALCULATED ON BASIS OF PREMIUM OR STOCK PRICE???
Lisa Anne (2 years ago)
this is very informative, as I am learning this stuff now. I have to admit though, I have a hard time focusing when the title on your board doesn't spell the word Basics correctly. Thank you for the information though.
Lisa Anne (2 years ago)
It's all good....
gazza363 (2 years ago)
This is what i have been looking for at 3:38 I thought i would have to buy the shares in the contract. I didn't realise that i could sell the contract on for profit.
Sasha Evdakov (2 years ago)
It depends on your setup and position... normally options decay so the difference between your contracts you would get rid of them at the value they are worth at the time..... - Sasha
gazza363 (2 years ago)
Thank you so much Sasha! when i sell, do i sell it for the full contract price or at a cut price thats still a profit for me?
Herb Tastesogood (2 years ago)
Quick question. Why would someone buy a PUT option from me if the stock price is going down? Do they feel that the stock price will eventually go back up? If that's the case, would they be buying it as a CALL option? I'm learning, sorry
Rachel Anne (2 years ago)
what if the value of the house go below $200,000. Lets say, $150,000, i could ignore the my call option and only pay $150,000 for it?
M (2 years ago)
Perfect Sasha, Great Analogy used!
Michael Perry (2 years ago)
have you done you class on how to put on a trade and how to get out of the trade yet?
M o N o O (2 years ago)
When selling an option what happens if the buyer exercises their right to buy 100 shares of stock and it is more than the seller has?
M o N o O (2 years ago)
+Sasha Evdakov (TradersFly) would they withdrawal money from the account or would you see your account either long or short 100 shares of stock? In a margin account
Becky Johnson (2 years ago)
So much easier to understand!
R Cs (5 months ago)
Becky Johnson Hi Queen Becky..🌹✌️ Greetings from New York 😇🙏🎵🎤🐩🎹💃🕺
Jaime Navarro (2 years ago)
Did no one notice that basics is misspelled in the title? LOL
Nghĩa Nguyễn (3 months ago)
JUST DID!! LOL but great content disregards the spelling error
Kevin Tejeda (2 years ago)
If the hypothetical "house" was going at $300,000. And my Call was at $200,000. Could wouldn't it be a smart investment to buy it at $200,000 and then turn around and sell it at $300,000 for a $100,000 profit?
gazza363 (2 years ago)
exactly right. that's why the profit is good on options
E W (2 years ago)
I believe that's the concept of options
William Pasternak (3 years ago)
because of this video - i finally understand this!
Zapper Zapped (3 years ago)
Let`s say i bought 100 shares of Stock 'A' for $100 on the 1st of January. I also bought 1 contract of the Call option for the same Stock 'A' at $100. So, how different is it for the option when the value of the stock reaches $200? Don't I still make the same money i'd have made from buying the stock? Besides, doesn't options trading require more margin than stock trading? Do options offer higher leverage than stocks, as only the premium is at risk?
Zapper Zapped (3 years ago)
That was really comprehensive!. Thanks a lot m8!.
Craftbeerdy (3 years ago)
Hi Sasha! Thank you again, so informative! What is the difference between shorting and buying a put (or should i say "selling" a put while "buying" a call?)? One question as well an option has an expiry date, you say on the third friday of the month, is that always the case regardless of when i make the order? If i make a call at 100 when it trades at 50 and 1 week before the expiry date it is at 110 what is my profit for 100 shares? => 1000$. Finally, when shorting a stock lets say at 50 and I see it is now at 20 can there ever be a problem for me to get out of my trade at that moment when I want to cash in? Thanks a million!
Fungist aka (B-laze) (4 years ago)
Im looking for a video that explain the very very basics, for very beginners. All ive seen so far is confusing for now =/
Will Ambery (4 years ago)
I now know how to trade options
Aaron Cohen (4 years ago)
Appreciate the video Sasha!  Thanks!
azedmanz (4 years ago)
is contract going to be given back for what he gave seller 10k?
Michael Perry (4 years ago)
Some really good stuff Sasha.  Thanks! 
Michael Perry (4 years ago)
Thanks for getting back to me 
Michael Perry (4 years ago)
Check out BBY what is with all the gaps.   I had to go over your gaps video.
Francesco Montrone (4 years ago)
Dear Sasha. I like how you explain everything, thank you! Since I am starting from the basic is there a chronological number of lesson to follow? like 1/23 ..2/23 3/23 etc..
Kurt Helgerson (4 years ago)
Basics. Not baiscs.
freaker126 (5 years ago)
thanks, for the reply and info!
freaker126 (5 years ago)
just one question, is it the same for every country in investing?
freaker126 (5 years ago)
Thank you for these great videos. Great, for beginners to learn!
Herman Brooks (5 years ago)
Your videos really helped me to get better at stock trading and investment. Thank you so much!
Riley McGerr (5 years ago)
kinda confused lol
Bookings Nassau (5 years ago)
Love your videos! thank you please keep posting more

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