Robinson, J. [Options Trading University]. (2018, November 2). Options Trading U: The Smart Way to Buy Call Options [Video File]. Retrieved from https://followthemoney.com/options-trading-university/

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Summary

Learn The Most Profitable Way To Buy Call Options

Questions

Why is deep in the money call options higher probability?

What option level am I approved for?

What does deep in the money actually mean?

Why give yourself a lot of time on the expiration?

What is the Delta?

• The theoretical estimate of how much that premium might change given a $1 change in the underlying stock

Why are there different deltas for different options?

Can you buy less than 100 shares ever? I don't feel like this is an option for me yet, because 1% of my total account is, like, super tiny. It's like $30. I could buy maybe 1 share of a thing...

Notes

[1:30] The key is you gotta be buying deep in-the-money call options

[5:30] Why buy DITM call options?

To gain full exposure to a stock with less upfront capital and less downside risk while still capturing about 100% of the gains you would have enjoyed if you had purchased the stock outright.

[10:22] The steps:

Step 1: Identify a high quality stock that you are bullish on and expect to go up in price over the next several months or years

Step 2: Look at the stock's option chain and find a strike price that matches your ideal price

Looking for lots of time on the expiration - like 180+ days.

If you buy really inexpensive call options (say an $80 call with a strike of $70) you're basically breaking even if you exercise your right to collect the stock today. You're doing this to hold onto it to for an extended period of time and get a much better return than you would have if you exercised that right today.

Step 3: Check the Delta for the call option you desire to buy

Want it to be supa high, like as close to 1 as possible. Shoot for .9. This is an indicator that it's going to move, which you want. Hopefully it moves up. :)

You're buying as much as you can afford. In this case, I believe you're looking to buy enough shares that your premium is not higher than 1-3% of your total account. That way, if you lose the money, you're still okay.

Step 4: "Buy to Open" the call with your preferred strike price and expiration date