Equity Options (Powerpoint)

Here’s a detailed course outline for Equity Options:

Module 1: Introduction to Equity Options

1. What are Equity Options?
   • Definition and Basic Concept
   • Key Terminology (e.g., Call, Put, Strike Price, Expiry)
2. How Equity Options Work
   • Rights and Obligations of Buyers and Sellers
   • American vs. European Options
3. Underlying Securities
   • Stocks as the Underlying Asset
   • Role of Dividends and Corporate Actions

Module 2: Types of Options

1. Call Options
   • Definition
   • Use Cases (Bullish Strategy)
2. Put Options
   • Definition
   • Use Cases (Bearish Strategy)
3. Exotic Options (Brief Overview)
   • Barrier Options
   • Binary Options

Module 3: Key Concepts and Mechanics of Options

1. Option Premium
   • Intrinsic Value
   • Time Value
2. Option Pricing Models
   • Black-Scholes Model
   • Binomial Model
3. The Greeks
   • Delta, Gamma, Theta, Vega, Rho

Module 4: Options Strategies

1. Basic Strategies
   • Long Call, Long Put
   • Short Call, Short Put
2. Intermediate Strategies
   • Covered Calls
   • Protective Puts
3. Advanced Strategies
   • Straddle and Strangle
   • Iron Condor
   • Butterfly Spread

Module 5: Options Trading Mechanics

1. Options Market Structure
   • Primary vs. Secondary Markets
   • Role of Market Makers
2. Order Types for Options
   • Market Orders
   • Limit Orders
3. Liquidity Considerations
   • Open Interest
   • Bid-Ask Spread

Module 6: Risk Management and Mitigation in Options Trading

1. Risk Factors in Options
   • Leverage and Its Impact
   • Time Decay Risk
2. Managing Risk in Options Trading
   • Stop-Loss Orders
   • Hedging with Options
3. Understanding Margin Requirements
   • Margin in Writing Options
   • Leverage and Margin Risks

Module 7: Options Expiry and Settlement

1. Expiration Dates
   • Standard Expiry vs. Weekly Options
2. Settlement Mechanisms
   • Physical Settlement
   • Cash Settlement
3. Assignment and Exercise Process
   • How Assignment Works
   • Early Exercise (American Options)

Module 8: Regulatory Framework and Taxation

1. Options Regulation
   • Role of the SEC and FINRA
   • Disclosure Documents (Options Disclosure Agreement)
2. Tax Considerations for Options
   • Short-term vs. Long-term Gains
   • Special Tax Rules for Options (e.g., 1256 contracts)

Module 9: Practical Applications of Options

1. Hedging with Options
   • Portfolio Protection
   • Minimizing Downside Risk
2. Speculation and Leverage
   • Capitalizing on Market Movements
   • Risks of Speculation
3. Income Generation Strategies
   • Covered Calls
   • Selling Puts for Premiums

Module 10: Case Studies and Real-World Examples

1. Historical Option Trades
   • Successes and Failures in Option Trading
2. Live Trading Simulations
   • Simulating Real-Life Scenarios
   • Analyzing Market Conditions

Module 11: Tools and Platforms for Options Trading

1. Trading Platforms Overview
   • Brokerage Platforms
   • Features for Options Traders
2. Using Analytics Tools
   • Options Chains
   • Option Calculators and Risk Graphs

Module 12: Course Review and Final Exam

1. Key Concepts Recap
   • Reviewing Major Strategies and Concepts