The Basics of Trading Options - VISUALLY EXPLAINED

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What Are Options?
Options are contracts that give the bearer the right, but not the obligation, to either buy or sell an amount of some underlying asset at a pre-determined price at or before the contract expires. Options can be purchased like most other asset classes with brokerage investment accounts.

Options are powerful because they can enhance an individual’s portfolio. They do this through added income, protection, and even leverage. Depending on the situation, there is usually an option scenario appropriate for an investor’s goal. A popular example would be using options as an effective hedge against a declining stock market to limit downside losses. Options can also be used to generate recurring income. Additionally, they are often used for speculative purposes such as wagering on the direction of a stock.

Options as Derivatives
Options belong to the larger group of securities known as derivatives. A derivative's price is dependent on or derived from the price of something else. Options are derivatives of financial securities—their value depends on the price of some other asset. Examples of derivatives include calls, puts, futures, forwards, swaps, and mortgage-backed securities, among others.

Call and Put Options
Options are a type of derivative security. An option is a derivative because its price is intrinsically linked to the price of something else. If you buy an options contract, it grants you the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date.

A call option gives the holder the right to buy a stock and a put option gives the holder the right to sell a stock. Think of a call option as a down-payment for a future purchase.

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#OptionsTrading #PutOptions #CallOptions
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DISCLAIMER:
This video is for entertainment purposes only. I am not a legal or financial expert or have any authority to give legal or financial advice. While all the information in this video is believed to be accurate at the time of its recording, realize this channel and its author makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in this video.

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[JakeBroe]

Give this video a LIKE to support my channel! Also check out my entire playlist on Trading Options here!

[cicciuzzu]

This is sooo complicated! I feel I need to watch each video like 30 times. It's gonna take forever....

[chrisbrown]

This is such a underrated channel, you deserve far more subs than you have and I look forward to seeing this channel grow. Thanks for all the great videos and helpful information.

[Thedopestceo]

Best explanations of trading options! I Love his teaching methods!

[skylark]

i do highly appreciate JAKE for your genuine effort and knowledge to HELP people ! YOU ARE GENUINELY RESPECTABLE PERSON and wish your HEALTH AND HAPINESS ! i have increased my basic knowledge from your channel and grateful for such basic knowledge. with regards from a retiree .

[SteveOfTheMountains]

Thank you for these valuable videos Jake. You are the best

[MrMountain]

Very well put-together video. I can tell this took some time to plan.

[Candychocolove]

Patiently waiting for the next video 😊

[rhythmsaidha]

Thanks Jake, appreciate you taking my request.

[Michael-jjic]

I'm glad I found your educational videos Jake even though it's through Russian aggression in Ukraine. Keep it up, you're awesome!

[monowerhossain]

Hi jake thanks for informative videos. I am new in this stock market? I have lots of question, but for now i want to ask you that i have very small capital to invest in the market. what are the penny stock share i can buy with fidility or robinhood or other platform? it will be really helpful if you answer or anyone can answer.

[Pie-qsyg]

Great video but not quite sure how selling a call option is bearish or reverse, how buying put options bullish?

[conureron]

My dad played a bit in the commodities option market. We had an Orange Grove and he would try to hedge against FCOJ price swings - especially after a freeze or two in Florida - ahead of when he’d sell his crop of Oranges.

[zw]

Hi, Jake. I just opened a Charles Schwab brokerage account last night. I remember I lost about 50 dollars when I commented on the video about $25K challenge. As of now, I made about 100. If I did not sell my 20 shares of Li Auto yesterday, I might have made about 130. Maybe it's because I am really new to the Schwab account, I feel like robin hood is more user friendly and easier to use. I plan to put some money into SPY and VOO, maybe some for arkk, and treat this as a long term investment account that I would look into as often as I do to robin hood.

[florencioello]

Can you sell a Put and reverse it by selling a Call before expiration?

[cherylpa]

Excellent explanation!! Great video, you really simplified a rather complex topic. Thank you!

[AntonioInvests]

This was an awesome video, I love selling options (never lose strategy) and collecting that premium 😁

[huypham]

Super pumped for this series. Time to make money this year with Jake

[electroduval]

There’s an error on this video Jake. At 5:05 you display a graphic which states “Stocks Go Up, stocks go down.” We all know stocks only go up! Please fix!

[venkateshiyer]

The most clear and crisp explanation of Options. Excellent!