[{"_1":2,"_46":-5,"_47":-5},"loaderData",{"_3":4,"_14":15,"_44":-5,"_45":-5},"root",{"_5":-5,"_6":-5,"_7":-5,"_8":9,"_10":11},"user","shoppingCartId","toast","locale","en","constants",{"_12":13},"paypalClientId","AenrHU49peF-ZUH-Yq7AXLLNZYGUGlml474U16NCjB4ZznmQCEjiliN3whyuVZmkb7VxEzmTALgtKEKE","routes/_store+/_readers+/email_author.$slug/route",{"_16":17,"_43":-5},"book",{"_18":19,"_20":21,"_22":23,"_24":25,"_26":27,"_28":29},"id","Z2lkOi8vbGVhbnB1Yi9TdG9yZTo6Qm9va1Byb2R1Y3QvMjkyMw","title","Developing Options Intuition (Draft)","state","published","contactAuthorMethod","email","aboutText","

This book is a work in progress. It is being distributed for free until I feel it is sufficiently polished to charge for it, as a way for me to get feedback on the content.

I Like Options.

People often say they're dangerous, and they can be, but I think the fear comes from a place of distrust of the unknown.

Some people who \"know options\" seem to only understand them very superficially and just \"understand\" that:

80%+ of options finish out of the money, so its easy to lose 100% of your investment
selling options is a surefire way to be exposed to \"infinite losses\"

which, in combination, sounds like a really good reason to never buy and never sell an option.

Stop Fake Learning

You probably know a lot of people who know how to add.They don't just know that 5+7=12 because that's a fact they memorized. Some time in kindergarten, someone explained to them that if you take 5 apples and 7 apples, put them in a pile, and count the group, that's the sum. That's a really digestible thing for most people and people don't really forget how to add much.

But somewhere around university, people don't really understand math. They can't explain calculus. They know \"rules\" like \"a2 + b2 = c2\" or they can repeat the quadratic equation by singing a song. They know that if you can take the derivative of a polynomial by \"moving the exponent down\" -- but they don't really know what any of that means or how it came to be. Eventually they forget it and say \"I'm not good at math\".

Similarly, there are business school grads all over the country that can draw a call expiration diagram but they don't really have a clue whats going on under the hood with options. These are failures of teaching.

I Want You To Like Options

I think options are misunderstood, interesting, complex, powerful and wonderfully elegant. They can be fun and easily explained -- they just require a different narrative than the traditional one. If you'll give me a chance, I want to tell you some half-truths and idealized explanations that will help you approach options in a different way to develop intuitions about options and begin the path to a more meaningful understanding of the topic.

This is meant as a supplement, not a replacement, to basic options education.

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