The Greeks Explained - How to Trade Options

[@JakeBroe]

Give this video a LIKE to support my channel! Also check out my entire playlist on Trading Options here! kzbin.info/aero/PLscTZuOqKWIxSZzy4ObKWDznEsCot_1HU

[@Yeah_Buddy_LIGHTWEIGHT]

Jake, these videos are the best. Highly underrated! I've watched the first few videos in the options playlist and they have been so helpful. I feel infinitely more confident that, with a little practice on paper trading, I can start trading options in my actual portfolios! Thank you so much for these informative videos. They deserve far more views and engagements.

[@JakeBroe]

Haha, I also agree they are underrated. Hopefully the algorithm helps me out in search results eventually. I am patient though. Videos I make have a weird way of taking off after 100 days.

[@Yeah_Buddy_LIGHTWEIGHT]

@@JakeBroe well if it's any consolation, I've been sharing it with friends/Discord groups I'm in when others are looking for educational resources on options

[@JakeBroe]

@@Yeah_Buddy_LIGHTWEIGHT , that's greatly appreciated!!

[@speck213]

I’m here a year later, so something right happened lmao

[@raymondsimmons1617]

You are so kind to explain the derivatives of options so people can be smarter options traders! A video like this is extremely helpful to viewers.

[@edschofield37]

Curiously, the least number of likes for the most valuable video!!! The world is weird. Jake you are the friggin best!

[@markndeb100]

Im a little confused. at 7:10 You defined the blue area for this call as being "in the money" and the white area as being "out of the money". When you provide your 1st example of the strike price of $50 and a delta of 30.7% probability of this contract expiring, you said that it is "in the money" which is the white area. You then refered to the strike price of $47.50 as being "in the money" in second part of your example. But this is in the blue area. Can you please clarify? I really like your videos. You have a great delivery on your explanations.

[@DavidtheNorseman]

If you listen again he says that the delta gives you the probability that the option (currently in the white area so out of the money or OTM) *will* end up, by expiry, in the money (or ITM). In this particular case that probability is 0.307 or 30.7 per cent.

[@haideriraqi3059]

hi Jake, you are great , English is my second language, I understand nothing when watching explanations in my native language, but you made it look very simple and easy. thanks man

[@peleliuvet]

Delta, Vega and Theta. My new 3 best friends. Old video, but timeless info!

[@deviambati3805]

Hello Jake, your explanation of Greeks is most outstanding and easy to understand. I have watched several videos on Greeks, but I am much more confident now. It will be great if you could take an example and show how the option premium changes when all values are taken into account for one or two days. Hats of to your dedication in making the learning more practical.

[@JakeBroe]

Thanks so much Devi! I really appreciate you tell me that!

[@bryonmorgan1704]

Jake, I have been binge watching your videos. Thank you for the transparency and sincerity. I have been learning a ton!! Please keep the video coming!!!!

[@JakeBroe]

Thanks Bryon! I appreciate the support!

[@ctkmobambi]

Details were clear & specific.......nice !!!!!!

[@edschofield37]

The dividend does play a part in the pricing of options in a big way around the dividend date.

[@peternguyen1960]

Hi Jake, thanks a lot for this video. I have traded options since 2012. I only know Delta. Seriously, you should change your career to become a teacher/professor.

[@michaelhastriter3299]

why would he take the pay cut?

[@peternguyen1960]

@@michaelhastriter3299 he is good at teaching. Money will follow.

[@JakeBroe]

Hey Peter! I was an English teacher in South Korea for 6 years prior to joining the Air Force. KZbin is my way of being a teacher again! Cheers!

[@peternguyen1960]

@@JakeBroe I can feel that through your video. I was a TA 12 years ago. After my graduation, I applied to be a Navy commissioned officer, but got rejected. Thus, I joined the defense industry and have worked until today.

[@matthewsherwin8741]

Yes, Jake is quite a good teacher. He challenges me to really think hard and stretch my brain to wrap my head around mathematical concepts that I’m not too good at. If I watch his videos several times I gradually learn the topic very well although being a humanities man this just isn’t easy for me. He’s one of the best teachers on KZbin!

[@stevephoung2372]

Thanks Jake! i don't usually comment. but most of your videos are easy to understand. i have learned a lot from you. you are the only guy that i click the like button the most. Keep making great videos. 😁

[@JakeBroe]

Thanks steve! I appreciate that!

[@wolfgangi]

3:57 Delta 11:32 Gamma 15:38 Vega 21:28 Theta

[@JakeBroe]

Cheers Wolfgang!

[@michaelmack6683]

By far the best and most easily understood video about the Greeks. Especially Theta. I like having maximum control of my contracts so when I buy I prefer buying LEAPS and selling very short term such as weekly calls .I think in your prior videos you like an expiration date about 35 days out. Why wouldn't you prefer a much shorter expiration date such as 7-14 days to get the higher premium decay?

[@EvilGenius007]

The option contract price knows where it is at all times. It knows this because it knows where it isn't. By subtracting where it is from where it isn't, or where it isn't from where it is (whichever is greater), it obtains a difference, or delta.

[@solwlady7021]

The best explained option classes, genius. Thank you very very much

[@edschofield37]

The correct term for a curve that declines in value over time is logarithmic. (a log value is the opposite of an exponent). Don't get me wrong.. you're still a genius, and much smarter than me by far. Took me months to learn this stuff on my own.

[@mindaugasInvest]

Great job! Your earned yourself a new subscriber 🙂

[@abdinasirmohamud2068]

Thank you very much Jake, I really enjoyed it and learned a lot from your videos, you’re amazing

[@JakeBroe]

I appreciate that greatly Abdinasir! Cheers!

[@deadleague3618]

Very helpful video for me. Thanks Jake.

[@JakeBroe]

You are welcome deadleague! Cheers!

[@jonnysantos5074]

I've been following you on Ukraine updates. I even have a American flag next to a Ukraine flag and a high caliber bullet as my antenna. And here I am finding out you also have the stock market videos

[@billionj]

Well done. Good explanation!

[@JakeBroe]

Thanks billionj! Cheers!

[@cjmor6590]

Thank you for this it might be niche but gives a ton of value to ur viewers

[@JakeBroe]

Thanks for watching CJ! I know not a lot of people know about or think about these, but I just want to get useful info out there. People will find it eventually I think.

[@mysorep]

great video, professor.do you have a video or can you make one of how to use the greeks together whien buying/ selling an option ?

[@TheThesaulin]

Hey Jake are you a professor or something?. The way you explain is the best lol. Thanks a lot

[@JakeBroe]

Hey Saul! I was an elementary school teacher for 6 years. And who knows, maybe someday I could teach at a university!

[@TheThesaulin]

@@JakeBroe that’s why you explain so well, you made options looks easy, keep the great work. I love your content. I wish I had a professor like you.

[@johnporter5828]

Hi Jake, just watched this video. I'm trying to understand the Black-Scholes calculator that Schwab makes available, but having difficulty understanding it. A video about practical uses would be helpful ! It would also be a nice follow-up to this videol....

[@stevenpesengco8756]

Hi Jake , great video!!! May I ask regarding wheel strategy? If i place a sell covered call for SPY, lets say strike price 410 and it was assigned . Then SPY price goes down to 390. How will I do my wheel strategy for sell cover calls at what strike price should I put? Thanks in advance again great video!

[@behrensf84]

So the first two Greeks price the option at fair value, based on probability. If delta is 0.4, you should win 40% of the time and the price of the contract should reflect that. The really important Greek is the Vega. You want to buy the call option when there has been a very robust drop in price, and that will make Vega go high, because there should be a regression to the mean value of the stock?

[@JakeBroe]

Exactly! I think for people who don't understand the Greeks... they don't understand Vega and why their contract value swings up and down so much day to day. Measuring IV and checking Vega is super important!

[@lslurpeek]

Very informative. Can you go over how to choose prices when selling cash secured puts and covered calls?

[@JakeBroe]

Hey Lance! I like selling cash secured puts about 30 to 60 days out after there has been a spike in volatility. That will give you the most money and the least risk of having to actually buy the stock! Same for covered calls.

[@sammeme7452]

Great video!

[@Kebinnugget]

Really missing your military financial vids!

[@JakeBroe]

Thanks Kevin, I appreciate that. But those videos bombed pretty hard... nobody was watching or finding them and ultimately I have to make videos that I think will help me grow a bigger audience. I appreciate your support! Cheers!

[@michaelhastriter3299]

I love them all! The military ones came at the perfect time.

[@amitsarkar3468]

Thanks Sir God Bless u 🙏🙏

[@popcycles]

Today might be a good time to focus on Rho!

[@YM-qf8iz]

So, if i understand, the Implied Volatility is 1 standard deviation for each direction?

[@SlickNickster]

Thank you!

[@JakeBroe]

You are very welcome Nick! Cheers!

[@dazedhavoc]

Amazing video.

[@122112obang]

In some stocks? The Vega amount is not their? When it’s like that what do you do?

[@MaximusMuleti]

Can you do an expalonation of sub dollar option contracts, where the asset is less than a dollar

[@moesadr3342]

Can Option Greeks be used to filter and find good options to trade? Anyone knows any tools or guide lines on how to use Options Greeks for entering a trade either long or short? Kind of what values to look for in each or all of them to enter or exit a trade?

[@blakemccluney9370]

Jake, curious on your thought if I should wait for a market correction to shift my current TSP G and F holdings to C,S or I. THANKS!

[@JakeBroe]

Hey Blake! I always tell people the same thing on my channel, go 100% C/S Funds and do not try to time the market with your retirement account. The long term average of the C/S Funds are over 10% and that's pretty good. So I would recommend you change it back and then don't look it. It might go down in the next couple months, it might not. That does't matter, you want that LONG term average!

[@VeryPowerfulMessage]

Jake thanks for the videos, you have excellent content, learned so much these past few weeks. I did want to know something on the Greeks, "Vega and IV" which as you mentioned were not next to each other. Can you hover over the word "IV", click and hold and see if you can drag the IV column next to the Gamma column? I just tried it on my Fidelity Option chain and it let me rearrange the Greeks. Hope it works on your end. Good Luck.. Thanks again!!

[@NoOne-xy6iz]

This was very informative. Thank you! I have a question about exercising call options: I have a call option expiring 5/31/2021. It's up over 177% and plan to exercise it for deeply discounted shares; because I like the company and would like to accumulate and hold the shares for years. Is this still a bad idea? Everyone seems to advise against exercising options. Would appreciate your thoughts on this instance. Thanks again!

[@JakeBroe]

Hey No One! Nope! Do not exercise it. If you are up 177%, then some of those gains are extrinsic value in the contract (time and IV). If you want to just buy the stock now, then "Sell to Close" your call option and take your profit. Then just go buy the 100 shares for the market order price. You got the profit increase realized from your contract already being in the money. This should cover the difference and overall yield you more value.

[@NoOne-xy6iz]

@@JakeBroe Got it! Thanks for replying.

[@andrewdornan3942]

do you have any videos on LEAPS?

[@JakeBroe]

Hey Andrew! I do have videos on LEAPS: kzbin.info/www/bejne/aaPHon9qnbZ2r68 kzbin.info/www/bejne/l4apeXiimbl0mq8

[@andrewdornan3942]

@@JakeBroe awesome!

[@tej95s67]

Can you make a video on the spaxx? Is there a thing like that in Charles Schwab? What's a money market account? etc..

[@JakeBroe]

Solid video idea, I can look in to it!

[@dqzj565]

Question: if I have a tsp and invest in s&p, does it make sense to buy s&p in my charlea schwab account too?

[@reversiontothemean6129]

Depending on what your allocation plan is, sure it makes sense. SWPPX is a solid index fund. For one of my kids, she is 80% C and 20% S in TSP and similar in Schwab Roth (80% SWTSX and 20% SWSSX).

[@JakeBroe]

Hey qzj! Your TSP is your retirement account setup through your job. If you have an account with Schwab, that might be a IRA or an ordinary investment account, and yeah, you can totally just buy the S&P 500 index there as well. It's a low cost, broadly diversified fund of excellent companies!

[@italic_lilac]

thank you

[@kevinlue4756]

Mind blown

[@JakeBroe]

Thanks for watching Kevin! Cheers!

[@behrensf84]

What happens if you buy an option with a delta of 1? Is it like guaranteed so that your cost for the option will be exactly how much money you make if the call expires at the current price, so profit is exactly $0?

[@JakeBroe]

That is correct Felipe! If delta is 1.0, then you can't make ANY profit from intrinsic value because you are already paying for it in the option premium. However, the contract still has some extra extrinsic value (time and volatility) and that can still go up if the stock jumps around.

[@behrensf84]

Aren’t there two types of options? The ones you exercise when you want, and the ones you only exercise at the time of expiration. How do the differ?

[@chrisvinci5417]

In america its just the ones when you want. Most people dont exercise early anyways

[@JakeBroe]

Hey Felipe! Yes, European options can only exercise at expiration and American options can be exercised at anytime. However, there are very few times you would ever want to do that since you give up the remaining extrinsic value of the contract. Selling the contract would yield more money than exercising it early... so you'd only do this to immediately get the stock for some other purpose not related to the value of the contract.

[@riosafado]

Can we day trade Option ?

[@peternguyen1960]

of course. Day trading options is very popular. But make sure you can consistently win with stock first, then touch options.

[@JakeBroe]

Yes you can! But just be careful of the PDT rule if your account balance is less than $25,000.

[@springnice8207]

🙏

[@craigchambers4183]

Actually, I use Greek in my work. There is no such thing as "Vega." The minuscule of "N" is 'v' (in English written as 'n') and the Greek N/v is pronounced "N/n" as in "new." In short, there is no "V" sound in Greek. That being said, they had to come up with something for 'volatility' I guess.

[@JakeBroe]

Interesting! Thanks Craig!

[@jimbala2996]

at least someone explained the Bible in simple way to soak into humanin brain great job .......

[@erabaduvillage6105]

Good friend ...my friend nice voice ..come again me ..my friend god bless ..

[@JakeBroe]

Thanks Erabadu! Cheers!

[@XxGiO13xX]

I think this was a bit too mathematical vs actually explaining "Hey, trade at 0.15 delta change to play it safe, and when to trade and examples. While I appreciate the math stuff, its hard to follow.

[@chocOneOOne]

Options involve math, there's no way to explain them without it, you're not going to get an explanation of options that's necessarily easy to follow the first time. The more you see it the easier it gets.

[@JakeBroe]

I agree Syliss! This is a lot of math and hard to visualize! But I know there are some people looking for this specific information, so I wanted to make this video. I'll be talking more options trading strategies using the greeks in future videos. Cheers!