Understanding Options

Understanding Options Overview

This Understanding Options course provides an overview of options terminology and how options can be used effectively. We explore moneyness, intrinsic vs. extrinsic value, and also show simple hedging strategies. We also look at pay-off diagrams and how we can use an option pricing model to determine effective strategies.

Understanding Options Learning Objectives

Upon completing this course, you will be able to:

• Define the basic terminology surrounding options such as calls vs. puts, and obligations vs. rights.
• Understand option pay off profiles and compare with futures and forwards.
• Interpret time value and intrinsic value and identify the concept of put-call parity.
• Explain moneyness of an option and evaluate how time and price affect the premium of an option.
• Compare options with simple future/forward hedges alongside examining common option hedges
• Describe  long call and long put hedges and summarize the concept of portfolio protection.

Understanding Options is an elective course of CFI’s CMSA® program

CFI’s Capital Markets & Securities Analyst (CMSA)® program covers all the basic, intermediate, and advanced topics about sales and trading, investment banking, and asset management. This program teaches you trading strategies used in the finance and capital markets industry. It is ideal for students who want to learn how to trade different asset classes. The program is completely online so you can take it at your own pace, from anywhere in the world.

Common career paths for students who take the CMSA® are Sales & Trading, Asset Management, Wealth Management, Treasury, Risk Management, and other capital markets careers.

Who should take this CMSA® course?

This course is great for anyone looking to enhance their knowledge of derivatives and options. These tools can be used in careers involving trading, and for managing the exposure of a portfolio.