Options

1.  Buying a Call:  Value goes UP as asset price increases above the strike price.
2.  Selling a Call:  Value goes DOWN as asset price increases above strike price.

3.  Buying a Put:  Value goes UP as asset price decreases below strike price.
4.  Selling a Put:  Value goes DOWN as asset price decreases below strike price.

options buyers PAY premiums to sellers.
options sellers RECEIVE premiums from buyers.

value of call option today = stock price today less the present value of exercise price considering risk-free rate.

factors in options pricing:                     Calls.             Puts.

current value of underlying asset            +               -
strike price                                               -               +
time to expiration                                    +               +
risk free rate                                            +                -
variance of return on underlying asset.   +               +



Delta: change in option price vs change in stock price, as a percent.  delta of .70 means if stock goes up $1, option should go up $0.7.  As option has more intrinsic value, the delta moves closer to 1.

Gamma: change of Delta vs. change in stock price.

Theta: Time Decay.  rate of change in option price vs. time.  theta of 0.35 means option premium decreases by $0.35 each day.

Alpha: Gamma/Theta Ratio

Vega: change in option price vs. 1% change in volatility.

Rho: change in option price vs. 1% change in interest rate.