It's easy to get started with options, but as you go deeper, you will find a world of strategies and concepts to take your trading to the next level.
We have put together a curated list of resources to help you dive deeper into the world of options, whether you're a beginner or on your way to becoming an expert.
If you know what you want to learn about, skim to that section and start browsing the links. If you are not sure, we recommend following along in order. Many of the resources in this guide are geared to stock options, but equally apply to any other underlier, be it FX or cryptocurrencies.
Getting Started with Options
Beginner’s Resources
OIC Introduction to Options - The Options Industry Council offers a series of articles on options basics.
The Bible of Options Strategies (Chapter 1) - The sample chapter from Guy Cohen’s book is available for free and offers a great introduction.
Learn About Investing in Options - Introduction resources hub from Merrill / Bank of America, includes Greeks.
Options 101 from the Options Institute - A quick self-paced course on options.
Explainer Videos
Option Trading for Beginners - An intuitive intro to calls and puts.
Complete Beginner’s Guide - A longer video introducing the basics of calls and puts and why you may want to trade them with examples to follow along.
Stock Options Explained - Video introduction to basic options contracts and payoff charts. Covers a lot of ground in 10 mins. Beginners might want to pause the video to digest some of the charts.
What Are Binary (Digital) Options? - Introduction to Digital Options.
Courses
Mike and His White Board - A comprehensive and easy to understand video series on option concepts and strategies.
Project Finance - Options trading focused YouTube channel for beginners.
Derivatives - Options & Futures - Coursera MOOC sponsored by Interactive Brokers.
Options Trading Basics (Paid) - A popular Option MOOC at Udemy.
Options Trading Course by Bullish Bears (paid) - A paid learning community MOOC.
More on Basic Option Types
Option Concepts
Basic Concepts
Greeks
Measuring options risk - A basic introduction to option Greeks.
Option Greeks by Tastylive - Article explaining the what and the why of option Greeks and a comprehensive list.
Option Greeks by CFI - A basic rundown of the major Greek formulas.
The Greeks Video Explainer - Beginners guide of the main Greeks.
Option Greeks Explained for Beginners - Intuitive Video Explaining Main Greeks with Charts.
To dive deeper into each of the major measures here are more resources:
Volatility
Implied Volatility: All You Need to Know - Great overview of implied volatility concepts.
Implied Volatility Module - Khan Academy lecture.
Implied Volatility and Standard Deviation - Explainer video.
Put-Call Parity
Put-Call Parity - Overview on Put-Call parity.
Option Strategies
Options are most powerful when used in combination with other positions to tailor exposures to your views or portfolio. Learn some of the most popular strategies first and then feel free to experiment with your own.
Basic Strategies
Option Strategies Quick Guide - A quick and easy overview of a number of strategies.
Linear Combinations
Call/Put Ladder: Read
Ithaca Stories
Risky Earn - Video explaining covered call and cash secured put strategies.
No Payin’, No Gain (zero-cost call backspread with digitals) - Video explainers of call backspread using linear options. Using the Ithaca app, a similar strategy can be traded as a story using a digital option instead.
Barrier Options - Lecture style video explaining Knock-In and Knock-Out options.
Intermediate Resources
If you already have an intuitive understanding of Options and would like to go deeper into the math, here are some resources to learn more.
Learning Resources
Fundamentals of Futures and Options - Option materials from the CFA institute.
Free MIT Finance Theory Course - Prof. Andrew Lo lectures on options.
Black-Scholes-Merton Model Explained - A clean explanation of the best known option pricing model.
Textbooks
Options, Futures, and Other Derivatives - The textbook “bible” of derivatives already in its 9th edition, John Hull’s textbook is the staple textbook on the topic.
Derivatives Markets - Similar coverage to John Hull’s book with a more intuitive approach.
Option Volatility and Pricing: Advanced Trading Strategies and Techniques - Comprehensive and accessible, covers options products and option strategies from the perspective of a practitioner.
Volatility - A great book to get an intuitive and technical understanding of options theory including option Greeks.
Advanced References
There is no end to what you can learn about options and their relevance to financial markets. Here are a few resources we found useful to help you start going down the rabbit hole!
Dive Deeper
Pricing Options with Mathematical Models - CalTech online course on EdX.
Pricing Barrier Options in Python with Binomial Trees - Video goes over how to build a model to price barrier options using python.
Monte Carlo Simulation for option pricing with Python - Video tutorial investigating the Monte Carlo simulation method for use in valuing financial derivatives.
Black-Scholes Formula, Risk-Neutral Valuation - MIT lecture on risk-neutral pricing and Black-Scholes derivation.
Option Price and Probability Duality - MIT Lecture showing mathematically how options are representations of probabilities.
Ithaca Matching Engine Concepts
Equilibria and Incentives for Illiquid Auction Markets - Study on periodic double auction markets co-written by Ithaca’s Founder.
Portfolio dominance and optimality in infinite security markets - Application of portfolio dominance to payoffs in security markets.
The High-Frequency Trading Arms Race: Frequent Batch Auctions as a Market Design Response - Paper discussing how Frequent Batch Auctions address the pitfalls of continuous markets.
If you made it this far, it means you have probably learned a lot. If you have any suggestions of resources we missed, please let us know by tweeting at @ithacaprotocol
