What you will learn
- Read an option contract and expiration convention.
- Calculate long-option payoff separately from profit.
- Interpret delta, theta and vega as local sensitivities.
Before you begin
Understand underlying shares, basic percentages and the possibility of losing the full premium.
Full lesson list
All lessons are freely available. No enrollment or payment is required.
Rights, strikes and expiration
- Read the underlying, multiplier and strike before calculating.
- Distinguish exercise style from settlement method.
Payoff, premium and profit
- Subtract premium before describing a long-option profit.
- Apply the contract multiplier to both payoff and premium.
Local sensitivities and volatility
- Interpret a Greek using its stated units.
- Avoid treating local sensitivities as a fixed prediction.