An Interactive Study of Options Risk Management

Upon completion of this course, participants will be able to:

• Define and distinguish calls vs puts, underlying, strike, expiry, premium, and explain rights vs obligations in options contracts.
• Compare the risk/return profiles of futures vs options, and long vs short option positions (including worst-case outcomes).
• Calculate an option’s intrinsic value and time (extrinsic) value, and classify options as ITM/ATM/OTM (“moneyness”).
• Explain the two core use-cases of options: speculation and price hedging, and identify which market participants typically buy/sell options.
• Interpret key exchange/market conventions for listed commodity options, including contract specs, tick size, tick value, and lot sizing.
• Describe and apply the core option risk sensitivities (“Greeks”), with emphasis on Delta as the primary sensitivity to underlying price moves.
• Run “what-if” scenarios to estimate option price changes from underlying moves using delta (and understand sign conventions for calls vs puts).
• Execute and evaluate a basic delta hedge to move a position toward delta neutrality, and explain why market-makers hedge underlying direction to focus on volatility.
• Differentiate historical vs implied volatility, and explain how volatility links to option prices and trading decisions.
• Construct and analyse core volatility strategies/spreads (e.g., long straddle and long strangle) and predict their key Greek exposures and risk/reward trade-offs.