Options Trading in Spreadsheets

Overview

Learn how to price options contracts and visualize payout of various options strategies using spreadsheets.

Options are an extremely important part of the financial markets. They matter not only to traders and asset managers, but also to anyone that receives stock options from their employers as part of their benefit packages. Understanding what options are — and, indeed, how they can make you money — can be made a lot easier with the use of technology. Throughout this course, you'll work with data and formulas to help you get the most out of trading via Google Sheets. By the end of this course, you will be able to use Google Sheets to build a valuation model from scratch and use it to price actual option contracts. Come along on this fun and interactive journey with Google Sheets!

Syllabus

Introduction to options
-In this chapter, you'll take your first steps on the path to mastering option valuation models in spreadsheets. In this chapter, you will learn the basics of derivative contracts known as options. You will find out how to use spreadsheets to perform basic operations to compute the value of different types of option contracts.

Options (and Strategies), Illustrated
-Things get slightly more complex in this chapter. You will learn option strategies, or combinations of option contracts designed to profit from your view of the markets. By the end of the chapter, you will gain knowledge of some of the most popular strategies such as bull and bear spreads and learn how to use spreadsheets to visualize possible outcomes of your strategies, while learning several useful spreadsheet functions along the way!

Option Greeks
-In the third chapter, you will take a trip to the United States and then to Greece to learn the main elements of the Black-Scholes model, which enables you to calculate the fair value of an option contract and to work out its sensitivities to various factors, such as changes in the price of the underlying asset and time decay.

Binomial Model for Option Pricing
-In the final chapter of the course, you will master the binomial option pricing model. It is a very useful tool, which enables you to compute the present value of an option contract based on the likelihood and magnitude of changes in the price of the underlying asset. You will utilize advanced spreadsheet formulas to build the model and expand it by an additional period.