One of the best ways to understand option trading, is to use things that you already understand. Then to see the similarities of that market to how options are priced and trade. Most understand how the insurance market works. A transfer of risk from one party to another. A premium paid from the insurance buyer to the insurance seller to compensate for the transfer of risk. This concept will really help you to understand the option market. There is a buyer and a seller. The buyer pays the option seller a premium for a transfer of risk. The option buyer has the choice (option) to do something (buy or sell). The option seller makes a promise to do something (buy or sell). An option that is in-the-money has intrinsic value There is real equity in the option and it is priced into the current value the option is trading for. An option that is out-of-the-money has zero intrinsic value. All options have some extrinsic value (time value) if there are days until expiration. And time is money! If you liked the contents of this video and want to learn more about trading the firm’s capital, please click on one of the following links: To learn more about trading in the firm’s Stock/Options Division, go to: https://mavericktrading.com/application-3-a/?utm_source=YouTube To learn more about trading in the firm’s FX/Crypto Division, go to: https://maverickcurrencies.com/application-3-a/?utm_source=YouTube If you simply want to learn more about proprietary trading, please view our White Paper at: https://mavericktrading.com/what-is-proprietary-trading/