You can call the direction correctly and still lose money on an option. This lesson shows the three ways that happens, and how to read a chain so you see them coming.
After this lesson you can
- Read an options chain like a price tag: bid, ask, midpoint, volume and open interest
- Know before you buy what a call costs per contract, and where it breaks even at expiration
- Split any option price into intrinsic value and time value, and see which half is guaranteed to melt
- Spot "not far enough", "not fast enough" and a volatility crush before they cost you
Chapters
- 0:00Right, and still losing
- 1:26What you're buying
- 3:00Reading the options chain
- 5:21What it pays at expiration
- 7:41Intrinsic value and time value
- 9:45The clock
- 11:49Volatility crush
- 13:55How a trade ends
- 15:45The whole lesson on one screen