Options are flexible tools that appeal to active investors. Take this course to learn how to magnify profits or protect your portfolio by buying or selling options.

This course is suitable for investors with some experience of owning and trading securities.

We welcome your feedback on this course.

1. Introduction to options

An introduction to the basics of option trading. Why trade options? What are options, and who uses them? This module goes through the basic features of options, and explains how they differ from shares.

2. What are options?

A more detailed look at what is in an option. This module explains the difference between call and put options, and discusses the main features of options traded on ASX, including exercise price, expiry, and exercise style.

3. Option pricing

How much is an option worth? This module looks at the influences on an option’s price. We explain the difference between intrinsic value and time value, and discuss the influence of variables such as volatility and time to expiry. We also look at the central importance of time decay in option trading.

4. Choosing the right option strategy

A basic guide to the things you need to think about when developing your option strategies. This module discusses some of the differences in approach between share investing and option trading. We explain how you can develop more effective strategies by taking into account volatility and time as well as price movements.

5. Profit from a rising share price

A look at how you can use options to trade your view that the market will rise. The bought call gives you leveraged exposure to a share price rise, and enables you to lock in the maximum purchase price for shares. This module discusses potential profits and losses, explains how to choose between the different calls on offer, and looks at your choices once you have bought your call.

6. Profit from a falling share price

How can you make money when you think share prices will fall? This module explains how put options give you the possibility to profit on the way down. We look at the risks and rewards of the bought put, and explain how to choose between the available options.

7. Protect your shares

Using options to protect your shares. Put options enable you to protect your shares from a fall in value without having to sell them. This module explains how you can lock in a minimum sale price for your shares. We explain the benefits and costs of the protective put, and how to put the strategy in place.

8. Earn income from your shares

Shares generally produce little value in flat markets. This module explains how you can write call options to work your portfolio harder. Writing covered calls generates income in the form of option premiums and can be a profitable strategy in neutral markets.

9. Index options

Index options allow you to trade the whole market in one transaction. ASX offers options over three share price indices, giving you broad exposure in one trade. This module explains how you can use index options to get leveraged exposure to a rising or falling market, or to protect a diversified portfolio from a fall in value.

10. How options are traded