Managing Options Positions in plain English

This course outline provides a comprehensive guide to understanding and managing an options position over time. It begins by explaining the unique nature of options and how they differ from their underlying assets. The course then delves into the specifics of what constitutes an options position, including its components and the various trades that can be executed to manage it.

Here's a breakdown of the key topics covered in the course:

1. The Life of an Option: This section explores the lifecycle of an option, from creation to expiration, and what can happen to options during different stages of their life.

2. Options Positions, Trades, and Legs: This part distinguishes between an options position, a trade that can adjust it, and the individual components or 'legs' within a trade.

3. Describing Options Positions: The course describes the various elements that make up an options position and introduces the payoff diagram, a visual tool used to analyze different scenarios throughout the life of an option.

4. Defining Adjustment Trades: Here, you'll learn about the seven types of adjustment trades that can be used to manage an options position: adding or removing a leg, rolling up or down, and rolling out or down and out.

5. Running Totals and Equivalent Position: This topic teaches how to keep an accurate running total of all credits and debits within an options position to understand the equivalent net position at any given time.

6. Managing an Options Position over Time: Pepsico: A real-life case study that illustrates managing an options position with adjustments and their impact on the equivalent position over time.

7. Monitoring Profits and Losses: The course explains how to monitor an options position's profit and loss (P/L) in real-time, differentiating between total P/L, open P/L, and realized P/L.

8. Reasons to adjust Options Positions: This section provides reasons why it might be beneficial to manage your options position by making strategic adjustments.

9. Differences between current P/L and P/L at expiration for Options Strategies: The course analyzes the impact of time decay (theta) and implied volatility (vega) on an options position's P/L over time.

10. Trading the Wheel: Finally, the course introduces the 'Wheel' options strategy, a popular method for generating income from option premium while maintaining significant downside protection. It covers the pros and cons of this strategy and the requirements to implement it.

Throughout the course, you will learn how to apply these concepts using real market data and trading platforms like thinkorswim. The aim is to equip you with the knowledge and skills to manage your options positions effectively, defend against adverse moves in the market, take profits at strategic points, extend the life of your positions, manage capital efficiently, and ultimately make informed decisions that can enhance your trading results.