What is an Option Worth?

Welcome to my options blog.  In the coming months I will be posting a number of videos explaining advanced options topics. Everything is free, so enjoy!

The first video is called “What is an Option Worth? The Many Faces of Volatility – and the VIX.” It explains option pricing in an easy-to-understand, intuitive manner – along with a complete discussion of volatility, especially implied volatility. From there I go into the VIX – what it is and what it truly represents – and then talk a little about the importance of implied volatility to option trading.

A few credits: Excel spreadsheets were constructed using the Hoadley option add-in functions.  The ARNA example at the end of the video is illustrated with screens from Think or Swim’s trading platform. And for pointing out the example to me, thanks to Chuck Eickelberg.

Please feel free to leave comments and questions – along with suggestions for future videos.

82 Responses to “What is an Option Worth?”

  1. jumpbackjack says:

    Great video, well worth the time to watch it. I’ve just made major strides in understanding implied volatility. Please do more videos. Thanks.

  2. Gloria says:

    Great video, thank you for taking the time to explain the topic in a clear manner.

  3. Vic Ruiz says:

    I just want to thank you. This video is one of the best on option trading.

    Thanks again.

  4. Nayan P says:

    I watched many options trading videos on you tube and read a several books you have an excellent job in explaining VIX and how it effects options price. Recently I got in to same scenario that you explained at the end of the video. I was wondering why my GOOG put options value went down even though stock went down in my direction. Now I know. This is very important topic to understand and you have done a wonderful job explaining it.
    Thank you!

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  7. john Brewer says:

    i took the optionetics course and have been youtubing all kinds of info so i could be educated enough to trade full time. Your presentation was the best by far. Thank you.