Options Explained Simply

Book excerpt: TRY BEFORE YOU BUY at OptionsExplainedSimply.com - preview the first 5 lessons there free of charge. Options Explained Simply: The Fundamental Principles Course is an introduction to Options. It will give you an intuitive and sound understanding of what Options are, how they are valued, and how they behave in changing market conditions. It will teach you the knowledge and give you the understanding that is necessary to analyse Options intelligently. The course begins by explaining some basic concepts, namely: Spot transactions; Long and Short positions; Arbitrage; Expected Value; Risk; and the Time Value of Money. Then it progresses to explaining Forwards and Futures, and then Options. The course is authored by Balbinder Chagger. He has a rigorous understanding of Options, consolidated over 13 years of professional practice in the Market Risk and Product Control functions of global investment banks. Furthermore, he has formally recognised teaching skills, developed while acquiring a PGCE in Secondary School Mathematics at the UCL Institute of Education, London, and while working as a Mathematics Teacher. His ability to teach Options simply enables you to understand them easily. No prior specialised financial knowledge is required to be able to follow the course. The knowledge is introduced and taught lesson-by-lesson. Furthermore, advanced mathematical ability is not required to be able to follow the course. The level of mathematics usually associated with Options is advanced and sophisticated. It is beyond the level that most people pursue an education in mathematics to. An advanced layer of mathematics makes Options appear incomprehensible and intimidating to most people. To avoid that, and to allow a wide audience to understand, this course is taught with simplified mathematics. All that is required is confidence with arithmetic, basic algebraic expressions, averages, simple interest, and reading graphs. The following steps have also been taken in order to promote understanding: - The subject matter is often taught with reference to familiar, real-life scenarios. - The amount of detail is simplified to keep the subject matter clear and unclouded by unnecessary layers of complexity. - Visualisation, an important and powerful means for learning for most people, is extensively utilised. Often, the written explanations given are complimented with graphical illustrations in order to clarify the subject matter more than words alone do. The calculations presented are visually transparent in that every key step in them is clearly shown. Coloured text is used to emphasise and/or clarify key points.