So, You Think You Know Options?

Just because you read a book, took a boring course, or even traded thousands of options, doesn’t mean you passed the “Beginner” stage. Some people tell me they’ve watched hundreds of hours of Youtube videos, but when I ask them a simple question they freeze.

This isn’t a dig on you or them. It simply says a lot about the available Options Education.

You see, time spent learning isn’t always the measurement of a successful outcome. What matters is the quality of the education that helps you fully understand the material in a shorter amount of time.

Let’s test that.

The Options Challenge

How do you know if you’re an “Options Beginner”?

“The Options Challenge” helps you appreciate where you land on the learning curve. If you can’t intelligently discuss your final answer backed with logical reasoning and some basic options concepts, then you’re a beginner.

Here are the assumptions:

• Today is January 1^st.
• XYZ is the stock.
• XYZ price = $100.
• XYX distributes No Dividends.
• Interest Rates are 0%.

And then, here are the simple rules:

Once you press the Start button below, I will show you 9 different XYZ options and you will write them down on separate post-its (or just cut up some paper slips). Of course, you don't have to use post-its, but I have done this quite a few times to know that using them makes it a bit easier.

You have 15 minutes to place those 9 options in order from least value to highest value. 

For example, if we used the two post-its below, then we know that the August $95 Puts are worth more than the June $95 Puts. So, the August option would be placed to the right of June.

Lastly, The Options Challenge forces you to make a few assumptions. The ability to make those assumptions and explain them is what ultimately determines your level of expertise. Are you ready?