Day 3: How Options Work

Lesson /35 | Study Time: 50 Min
# How Options Work

## Moneyness Concepts
- In-the-money (ITM) definition and characteristics
- At-the-money (ATM) sweet spot
- Out-of-the-money (OTM) risk/reward
- Relationship to strike price

## Option Value Components
- Intrinsic value calculation
- Extrinsic value factors
- Time value decay
- Volatility impact

## The Greeks Introduction
- Delta: Directional exposure
- Gamma: Delta change rate
- Theta: Time decay effect
- Vega: Volatility sensitivity

## Price Influences
- Underlying price movement
- Time decay impact
- Volatility changes
- Interest rates effect