The RISK of Trading Options – Options Trading Explained

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24 thoughts on “The RISK of Trading Options – Options Trading Explained”

  1. Jake does a fine job in explaining options, both the theory and the practice. His explanations are clear, well thought-through and smart. Thanks. But the retail buyer of an option is not trading against the retailer seller. Not primarily, just secondarily. When you purchase options you trade against the broker/finance company – which sets the terms of each trade. Like playing poker with pals in a casino – the (mafia-run) house always deals and you all play the dealer more than play each other. Still, these videos are great. Thanks.

  2. This video is where puts clicked for me! And potential over time is literally the best definition of extrinsic value. That’s how I explain it to everyone hope you don’t mind Jake!

  3. binging these videos and commenting for the algorithm. and because I like learning ?

  4. I've been enjoying these videos, thank you for doing this. But I have a question on your slide around 7:37. It says "call contract" on one of the columns but you're talking about buying puts. Are these terms interchangeable when talking about the contract itself?

  5. Jake, at 8:11, all that can be lost is $319, or can one lose to infinity like in a short sale? In other words, the limit of the loss can't be above what one pays?

  6. So Jake, something I still don’t get. If I buy a call or put, and the price in fact DOES change in my favor, BEFORE the expiration date, can I “execute” the option then, do I have to wait until expiration before making my profit or do I just sell the contract to someone else? How does the execution timing work?

  7. Yeah I found a lot more success buying options out of the money, minimum 60 days expiry up to a year it's added a lot to my returns, selling covered is usually great but can have some issues it's like a game of hot potato

  8. I need tour help capt my mom is a former military doctor and has a decent tsp account can we convert that over into a Roth or traditional for more options the military investing options are kinda lame

  9. Jake, the reason people buy options is for the percentage return. Additionally there are strategies that can limit your premiums. For instance, in your March Put on SBUX example, you could buy the 105 Put ($540) and sell the 100 ($325 just using both asks for simplicity sake). In this vertical strategy, to control 100 shares, you would pay $215 with the opportunity to earn a maximum of $500 if SBUX drops to $100 or below on or before expiration.
    Best times to just buy calls or puts by themselves is before some major news announcement (earnings, demo day, battery day, etc). Buy on rumor, sell on news is how the saying goes.

  10. Hello Jake, could you please make a video comparison on PenFed credit union credit cards and Andrews federal credit union credit cards ? Thank you

  11. Great video as usual Jake. I love how you use simple examples to explain a relatively complex concept. I can see this being helpful for many people especially those who recently started doing stocks. Keep it up!

  12. Hello! I'm curious do you have any reviews of the charles schwab roboadviser? That is what I currently use, but I'm unsure of what returns it's going to give me. Would it be better to invest in a few etfs independently instead?

  13. Typically, buying a put option is a good idea when the buyer is going to collect the volatility premium. When a stock is crashing, the premium is skyrocketing due to a huge vega influence on the option pricing. Moreover, there is a general volatility indicator called VIX.

  14. I think this video was good, but the only issue I have is that when you were comparing owning 100 share to buying the contract, you didn't really go into how much money was invested in these two cases. Being able to get the profit of owning 100 shares (minus the cost of the contract) while only investing a small fraction of the money is the appeal. I don't think it really changes the conclusion (options are very dangerous and a great way to lose money), but your tables wouldn't look so skewed in favor of ownership if money invested had been a row showing $10000 on one side and $500 on the other.

  15. Because you can take the same position while collecting premium Jake! Don't let your scriberz think exercising contractz is an option! (my bad)

  16. Hey Jake, nice job explaining the Greeks. I assume you will continue exploring different options. Keep it up!

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