Thanks for your comments. This was meant to be an options 101 educational piece as a follow up to questions that RV received from my macro trade idea on shorting Brazil from earlier this year. The goal here was to outline options from other types of derivatives and explain the Greeks.

@Mike T. Could you please elaborate and perhaps recommend some resources? I'm exploring the ways of limiting the downside risk when selling options. Thanks!

to Nikola D, ask the folks at RV to provide you with my contact details and I will be happy to DM with you directly.

Selling options during a structurally low vol environment is quite literally picking pennies up in front of a steam roller.

Nikola D: tastytrade.com is the home of investor education on short option mechanics and probabilities

In reply to picking up pennies comments below? It's certainly true a high volatility environment is always strongly preferred but even in the current 'low vol' environment there are always UL's somewhere with options having elevated premiums compared to 12 month historical (high IV Rank) providing good opportunities. Low vol is certainly NOT the time where we see an abundance of such UL's but they always out there current examples may be seen here:- https://marketchameleon.com/volReports/VolatilityRankings Short premium strategies still work in 'low vol' times and with similar 'win rate' statistics as high vol periods i.e. but the amount of money the average P&L per position I acknowledge is LESS, but still a most worthwhile activity. Also remember in earnings season particularly, short premium traders are 'extremely active'. One example of a very common strategy used by short premium folks, takes advantage of elevated options premiums as earnings day approaches (this happens even in an overall low volatility times) then using the market place calculated 'expected move', the trader then 'sell's' a defined risk trade in the weekly option chain in which the earnings announcement is to be announced. A 'theoretical' optimum trade would be Earnings in Company X scheduled on a Thurs AMC, with expiry due next day. A new position is opened as the Thursday close approaches where the short strikes are placed beyond the expected move, how far beyond depends on the risk appetite. If company X earnings report is met with indifference and the stock next day trades within the expected range the previously rich premiums collapse (Volatility Crush) and it's happy days as the position is closed at the Open by buying back at a much lower price than it was sold for. If the earnings are deemed a blowout up or down and the stock opens significantly outside the expected range the worst case scenario is the maximum loss as known and understood at time of trade entry.

.... and to add one small additional point with /GE futures don't be put off by the huge notional value as most brokers only require a tiny margin to trade it so the typical brokers view of trading /GE is it's low risk for them = good instrument for even the smallest of accounts.

Yes, the filming was done in NYC on Thursday, July 26th

I’d be happy to do more of these. This was meant to be a basic overview on investing with options and explaining the Greeks.

Thanks for your comments. This was meant to be an options 101 to explain the Greeks and basics of options. I am the CIO of Quadratic.

With that said, I would still love to see more on options trading specifically and do like Nancy Davis's delivery and he sharing specific market experience. A trade ideas or some other deep dive on options pricing and strategy with specific examples would be awesome.

have to agree with you, anyone can learn this stuff googling for 1h, no reason to have Nancy babysitting the audience, get her back with examples of how to actively manage an option in different scenarios (that Brazil video was impressive)

Andrew, I can't thank you enough for sharing the OptionAlpha material, I have already 10xed my knowledge of the topic as I started from scratch. The power of the RV community here. I hope interviewees like Nancy will just stick to more advanced applied strategies (like that video on Brazil, totally stunning), as the foundations can be found elsewhere.

Thanks, Charles! I would love to come back to do a more detailed version. This was meant to be a 101 as a follow up from questions from my trade idea pitch on short Brazil that was implemented with long puts.

If you are writing the options I agree, but she is telling the children to buy only. Knowing the IV Rank for exploiting the vol crush after earnings or another market moving event can be very profitable.

"The greeks are priced from recent history." That is not really correct. Greeks are priced from expectations of the future. I.e. for example before a company's earnings, its implied vol will be high, after the earnings, its implied vol usually goes down. Of course expectations of the future are somehow ankered by experience from the past.

I’m still not sure what prices greeks. Open interest, put call spread, or price. I assumed it was just mathematical probability pricing them. Is it possible to get positive or extra negative carry on a call with no price movement because of price adjustment?

Tim - there’s just no quick way to express a deep study of options theory that takes years distilled into a pithy lesson. Read the transcript and pursue the subjects within topically. If you truly want to understand then enroll in options theory classes in a grad school program. It’s just not something you will “intuit” out. There’s being smart and then there’s the work. Option models that break out greeks exposure and dynamics are just models. So there’s knowing the models and then there’s making decisions based on them, which often strays in subtle ways from theory and she explained. This takes time, perseverance, patience, passion, and analytical skill.

like flying a plane without instruments

I think the consumerist desire for simplification or complex reality is too strong. Her conversation was about as “simple” as it gets without losing the signal. Those confused should either stay away from options or study them intensively and consider whether they have the mathematical skills and perseverance to do it.

love Mike Green.

sorry found it idk how to delete this