Introduction to Options (Beginner & Intermediary)

Course Overview

Beginner (Level 1): This Introduction to Options course covers basic option mechanics, comparison to forwards, parity and other simple arbitrage relationships, common applications of options by investors and hedgers, introduction to option pricing and volatility.

Intermediary (Level 2): Building on the Beginner (Level 1) training programme, this Intermediary Options trading course looks at the details of option risk management, introduction to and analysis of the first-order Greeks. It also covers the second-order Greeks, understanding the implied price distribution of the pricing model, second-order Greeks which show sensitivity to real-life price distributional assumptions.

Learning Objectives

By the end of the Beginner (Level 1) Options training programme, participants will be able to:

• Understand the fundamental mechanics of options and differentiate them from forward contracts, focusing on their unique features and how they operate within financial markets.
• Learn about parity and other simple arbitrage relationships in options trading, enabling participants to identify and leverage arbitrage opportunities effectively.
• Explore common applications of options for investors and hedgers, including how options can be used to manage risk, speculate on market movements and enhance portfolio returns.
• Gain an introductory understanding of option pricing models, focusing on the factors that influence option prices and how these models are used to value options.
• Delve into the concept of volatility in the context of options, understanding its critical role in option pricing and strategies to anticipate and respond to volatility changes.

By the end of the Intermediary (Level 2) Options training programme, participants will be able to:

• Build upon the foundational knowledge from Level 1 to explore detailed aspects of option risk management, focussing on how options can be effectively used to hedge against market risks.
• Introduce and analyse the first-order Greeks (Delta, Gamma, Theta, Vega, Rho), providing insights into how these risk measures can influence option pricing and trading strategies.
• Extend the understanding of Greeks to second-order Greeks, highlighting their importance in showing sensitivity to real-life price distributional assumptions and refining options risk management practices.
• Develop a deeper understanding of the implied price distribution within option pricing models, enabling participants to interpret market expectations and volatility more accurately.
• Examine the practical applications and implications of second-order Greeks in option trading, emphasising their role in addressing the complexities of market behaviours and pricing anomalies.