Introduction – Key Points About Selling Options Part 1

Introduction – Key Points About Selling Options Part 1

 

Introduction – Key Points About Selling Options (Part 1)

 

Hello everyone and welcome to another options educational session. I am Ed Modla, the Director of Retail Education at the Options Industry Council. I’ve been in the business since 1997 in a variety of formats for trading electronic trading brokerage and now education and support. Ultimately, supporting the options exchanges and the Clearing Corporation, which is really where all the funding comes from for our efforts. Today’s topic is key points to know about selling options. There will be a mixture of discussion on strategies involving selling options as well as conceptual ideas that you need to understand as well. Here is our disclaimer, which we will get out of the way and then about OIC and who we are.

Our website is options education.org. There is plenty of written material, podcasts, videos and an events section where you can sign up for our in-house monthly webinars. We have a good session coming up next month, I wanted to mention, October 23rd. One of our keynote speakers will be Larry McMillan. Some people call him the Michael Jordan of options education. He has one of the most popular books ever written on the topic. He’s going to be giving one of our webinars on October 23rd.

So, if you want to sign up for that come to the website and check out the events section and sign up for it there. And make use of the Investor Services team with any questions you have about our education or any specific options questions. It’s a team of professionals you can reach by email. services free of charge and they can be reached at options@theocc.com. Usually when I give presentations a certain number of people in the audience will benefit from something that is more basic in nature, so I’m going to start there today.

Some options 101 rights and obligations and then the concepts of moneyness, time value and theta before finishing up with comments and an explanation of the exercise and assignment process as well as pin risk. This presentation, more or less, was put together for a basic level crowd. I feel like this particular audience is a bit more sophisticated than the majority of the audience’s that I speak to, so I will maybe go off the slides once or twice specifically when talking about Theta and maybe inject further commentary there about time decay and probably weave in a thing or two on other Greeks, like gamma and Vega and some comments on implied volatility as well. All the while, we will focus our efforts from the angle of the option writer, or otherwise known as the options seller. But it’s also useful if you’re taking one side of the options contract, one side of the trade, to understand the other side. So we’ll have to get through the buyers as well.