Option Combination Trading

This course gives participants with a working knowledge of options, an understanding of how multiple options can be combined to create different exposures to changes in the financial instruments on which they are based. These combination trades can be used to increase or limit, the profit or loss that arises for the trader. The course covers this from both an outright market view and hedging perspective. It also looks at how these strategies can create exposure to changes in both the underlying and in the volatility. Exercises throughout the course allow participants to price and value a range of combination trades.

Suitability

For individuals with a working knowledge of options

Learning Outcomes

At the end of this course delegates should understand
– A range of combination option trading strategies
– How to calculate the payoff and returns of combined option trades in a variety of scenarios
– How to price combination option trades

Course Content

Buyside Considerations
‐ Rationale for trading options
‐ Exchange traded vs. OTC
‐ Top 10 structures

Bullish Option Trading
‐ Long call
‐ Short put
‐ Risk reversal

Exercises: Calculating returns on investments for combined option trades in a variety of scenarios

Hedging Option Trading
‐ Protective put
‐ Covered call

Volatility Option Trading
‐ Straddles & strangles
‐ Tail risk
‐ Butterflies & condors

Exercises: Recommending appropriate option trades

Option Spread Trading
‐ 1×1 call spreads
‐ 1×2 call spreads
‐ Call ladder
‐ Call spread put (seagull)
‐ Share repair & the turbo

Exercises: Pricing structured option trades

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of participants felt more confident in their role, following an Alpha commercial leadership course.

Why study with Alpha?

Innovation and creativity born from experience

We are thought leaders in instructional and learning journey design and holistic solution architects. We have extensive finance and investments experience combined with skills application to deliver performance improving results. We develop immersive learning environments that maximize time to productivity, support talent retention and added value to improving quality of hires.

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We are focused on mining the embedded organisational intellectual capital for the benefit of the next generation. We create and curate best in class practice gathered from our experience with the leading financial institutions. We design our programmes with the end in mind – what results are you trying to achieve with this intervention? What metrics will we set ourselves to achieve that?

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Quality and innovation, using current market and industry best practices, have made us a trusted partner in delivering dynamic and motivating training for the financial and capital markets. Our programmes are generation proof and responsive to evolving learner needs and styles. Our solutions use a multi-stakeholder engagement strategy that expands beyond relationships between the learner and learning provider. We create connections with managers, peers and the wider business to drive impactful return on investment..

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