Options Trading Strategies In Python: Basic

Yes, you will be awarded with a certification from QuantInsti after successfully completing the online learning units.

No, there are no live or classroom sessions in the course. You can ask your queries on community and get responses from fellow learners and faculty members.

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There is no admission criterion. You are recommended to go through the prerequisites section and be aware of skill sets gained and required to learn most from the course.

We respect your time, and hence, we offer concise but effective short-term courses created under professional guidance. We try to offer the most value within the shortest time. There are a few courses on Quantra which are free of cost. Please check the price of the course before enrolling in it. Once a purchase is made, we offer complete course content. For paid courses, we follow a 'no refund' policy.

Some of the course material is downloadable such as Python notebooks with strategy codes. We also guide you how to use these codes on your own system to practice further.

We focus on teaching these quantitative and machine learning techniques and how learners can use them for developing their own strategies. You may or may not be able to directly use them in your own system. Please do note that we are not advising or offering any trading/investment services. The strategies are used for learning & understanding purposes and we don't take any responsibility for the performance or any profit or losses that using these techniques results in.

Quantra environment is a zero-installation solution to get beginners to start off with coding in Python. While learning you won't have to download or install anything! However, if you wish to later implement the learning on your system, you can definitely do that. All the notebooks in the Quantra portal are available for download at the end of each course and they can be run in the local system just the same as they run in the portal. The user can modify/tweak/rework all such code files as per his need. We encourage you to implement different concepts learnt from different learning tracks into your trading strategy to make it more suited to the real-world scenario.

No. We provide you guidance on how to create strategy using different techniques and indicators, but no strategy is plug and play. A lot of effort is required to backtest any strategy, after which we fine-tune the strategy parameters and see the performance on paper trading before we finally implement the live execution of trades.

Yes, you can deploy the backtested options trading strategies in the live market using IBridgePy API. A live trading strategy template will be provided in the course. The template uses IBridgePy to connect with Interactive Brokers. A subscription may be required for options data. You can tweak and optimise the strategy code, paper trade and finally deploy the strategies in the live market!

Lifetime access means that once you enroll in the course, you will have unlimited access to all course materials, including videos, resources, readings, and other learning materials for as long as the course remains available online. There are no time limits or expiration dates on your access, allowing you to learn at your own pace and revisit the content whenever you need it, even after you've completed the course. It's important to note that "lifetime" refers to the lifetime of the course itself—if the platform or course is discontinued for any reason, we will inform you in advance. This will allow you enough time to download or access any course materials you need for future use.

Put option provides the buyer of an option with the right to sell the underlying asset at a predetermined price. The buyer of the option has the right to either exercise it or not. However, the seller of the option is obligated to buy the underlying asset, if the put option is exercised, from the put option buyer. Usually, the seller makes a profit from the premium amount received if the price of the underlying stays above the predetermined selling price or strike price.

Call Options provide the buyer of an option with the right to buy the underlying asset at the strike price. The buyer of the options has the right to either exercise it or not. However, the seller of the option is obligated to sell the underlying asset, if the call option is exercised. Here too, the seller makes a profit from the premium amount received. For the buyer, if the market price is higher than the price agreed in the call option, he/she can buy the underlying asset from the call option seller at a lower price.

Following are the different styles of options:

American option - American option allows the buyer of the option to exercise the option at any point in time before the expiration date.

European option - European option provides the right to exercise the option only once, which is at the expiry date of the option.

Bermudan option - Bermudan option allows the buyer of the option to exercise the option at specific dates during the entire life of an option.

American options usually call for the highest premium amount due to its option exercise flexibility, followed by Bermudan and European options.

Put-call parity is a theoretical concept in the world of options trading, which states that there is a price relationship between calls and puts with the same underlying asset, expiry date and strike price. The formula is mentioned below :

Call Option + Strike Price = Underlying asset + Put Option

The theory states that if this parity is non-existential, there is an arbitrage opportunity in the market. For example, i: If a trader buys a call option and sells a put option with identical strike price and expiration date, the value would be equivalent to buying the underlying asset and borrowing an amount equal to that of the strike price valued at today’s price.

Volatility is defined as the constant fluctuation in the price of an underlying asset and thereby option price. Volatility is measured statistically in the form of standard deviation or variation. Volatility as a phenomenon is natural in financial markets. However, extreme volatility on either side of the market can take place due to several factors related to the underlying asset. More the volatility in the financial markets, more will be the premium amount for a call or put option, due to the risk associated with options in the market.

There are lots of strategies using options, we will discuss two basic strategies here :

Bull Call Spread strategy - A trader buys a call option at a certain strike price and sells another call at a higher strike price in this strategy. Both the calls are for the same expiration date and have the same underlying asset. The trader believes that the price of the underlying asset would rise but very minimally. The trader also hopes to receive the premium from the call sold and that it will not be exercised by the buyer of the option.

Bear Put Spread strategy - A trader buys a put option at a certain strike price and sells another put at a lower strike price in this strategy. Both the puts are for the same expiration date and have the same underlying asset. Here, the trader believes that the price of the underlying asset would fall but very minimally. The trader also hopes to receive the premium from the put sold and that it will not be exercised by the buyer of the option. The risks and profits are limited in this strategy.