Just to get this leg of the board rolling, I’m just going to give a brief overview on an introductory level on how one may be able to utilize Options in conjunction with a stock position or as an alternative to a stock position.

Gradually, as members contribute, reply and ask questions, more basic to advanced concepts will be introduced to meet with the many levels of traders and those interested in Options visiting this board and the Option threads.

What is an Option?

An Option is a direct derivative of the stock they are created from. In other words, it is the vehicle in which you, the Option holder, may fine tune how your stock position or stand alone Option position will perform throughout the life of a specific trade or a long term investment.

Therefore, Options are an invaluable vehicle that is able to provide you with a pre defined risk and a pre defined profit and loss potential.

Not all stocks are Optionable and not all Optionable stocks have LEAPS (Long-Term Equity Anticipation Securities – which are longer term target Options 1-2 years and further out), but the ones that do, provide the direct underlying asset with additional alternatives to efficiently manage risk.

Options are a decaying asset, which means that an option has only a limited time to exist before it expires. It is eventually succumb by Theta. Theta is one of the Greeks on which an Option’s lifespan is based on.

Theta measures the passage of time during the life of the Option. Later in one of the upcoming posts, we’ll be discussing what is known as the Greeks. We’ll be focusing on the understanding of First Tier Greeks for now, which consist of Delta, Gamma, Vega and Theta.

In order to understand and utilize Options correctly, you “must” understand “all” of the Greeks and the respective roles they play in the life of an Option.

For those new to Options or for those of you who have a limited understanding of Options, I hope you find this brief introduction useful and helpful.

I will be periodically posting more on Options … so check back often.

Super job on this - thanks very much...! It's great to get tips on how it all works, as many of us are stock/fx only traders.

-ken