The document discusses options trading strategies and concepts. It defines call and put options, describes different option types like at-the-money, in-the-money and out-of-the-money. It then explains basic option strategies like long call, short call, long put and short put. More complex strategies like long strangle, short strangle, long straddle and short straddle are presented along with their construction. Greek letters like theta, delta and vega are introduced and their impact and role in options trading is explained.

1. London Traders and Investors Club Options Trading and Volatility Arbitrage

2. Introduction 1 ) DEFINITIONS AND BASIC STRATEGIES 2) COMPLEX STRATEGIES 3) GREEK LETTERS 4) Q & A

3. CALL/PUT OPTIONS THE BUYER /SELLER HAS THE RIGHT (BUT NOT THE OBLIGATION) TO BUY / SELL A SPECIFIED QUANTITY OF A SECURITY AT A SPECIFIED PRICE (STRIKE PRICE) WITHIN A FIXED PERIOD OF TIME (EXPIRATION)

4. TYPES OF OPTIONS AT THE MONEY STRIKE PRICE OF THE OPTION = UNDERLYING ASSET PRICE

5. TYPES OF OPTIONS IN THE MONEY UNDERLYING ASSET PRICE IS ABOVE / BELOW STRIKE PRICE OF THE OPTION

6. TYPES OF OPTIONS OUT OF THE MONEY UNDERLYING ASSET PRICE IS ABOVE / BELOW THE OPTION’S STRIKE PRICE

7. Long Call

8. Short Call

9. Long Put

10. Short Put

11. Complex Strategies

13. Long Strangle Construction BUY 1 OTM CALL BUY 1 OTM PUT

14. Long Strangle SIGNIFICANT VOLATILITY OF THE UNDERLYING ASSET EXPECTED IN THE NEAR TERM

15. Long Strangle

16. Short Strangle Construction SELL 1 OTM CALL SELL 1 OTM PUT

17. Short Strangle LITTLE VOLATILITY IN THE UNDERLYING ASSET EXPECTED IN THE NEAR TERM

18. Short Strangle

19. Long Straddle Construction BUY 1 ATM CALL BUY 1 ATM PUT

20. Long Straddle SIGNIFICANT VOLATILITY EXPECETED IN THE NEAR TEARM

21. Long Straddle

22. Short Straddle Construction SELL 1 ATM CALL SELL 1 ATM PUT

23. Short Straddle LITTLE VOLATILITY EXPERIENCED BY THE UNDERLYING IN THE NEAR TERM

24. Short Straddle

25. Butterfly Spread Construction BUY 1 ITM CALL SELL 2 ATM CALLS BUY 1 ATM CALL

26. Butterfly Spread THE UNDERLYING ASSET IS EXPECTED NOT TO FALL OR RISE MUCH BY EXPIRATION

27. Butterfly Spread

28. Greek Letters

29. THETA 1) IT MEASURES THE SENSITIVITY OF AN OPTION TO TIME DECAY 2) IT TELLS HOW MUCH MONEY THE OPTION PRICE WILL LOSE FOR EVERY DAY THAT PASSES

30. THETA

31. THETA LONG POSITION = YOU WANT NEGATIVE THETA VALUES SHORT POSITION = YOU WANT POSITIVE THETA VALUES

32. Delta IT MEASURES THE SENSITIVITY OF AN OPTION TO UNDERLYING ASSET PRICE MOVEMENTS

33. Delta

34. Delta CALL OPTIONS HAVE POSITIVE DELTAS (0;1) PUT OPTIONS HAVE NEGATIVE DELTAS (-1;0)

35. Delta IF THE DELTA OF A CALL OPTION IS 0.75 IT MEANS THAT FOR EVERY 1 POINT MOVEMENT IN THE UNDERLYING ASSET THE OPTION PREMIUM WILL INCREASE BY 0.75

36. VEGA PROBALY THE MOST IMPORTANT GREEK IT MEASURES THE SENSITIVITY OF AN OPTION TO THE UNDERLYING ASSET VOLATILITY FLUCTUATIONS

37. Vega

38. Vega IF YOU SHORT A CALL / PUT = YOU WANT LOW VEGA VALUES IF YOU LONG A CALL / PUT = YOU WANT HIGH VEGA VALUES