Market Memos · The Options Path

Cheap Vol, Dear Vol

Friday is a classroom — one structure at a time, from the option chain up. Tuesday is a trading desk, where the previous Friday goes on ten times. Options only: reading a chart is a separate lineage of practice, and it has its own materials.

Ten topics, three questions

The list below looks long. It is not, because every structure on it answers the same three questions. Get those straight and the names stop being the hard part.

ONE

Buying or selling?

Are you paying premium or collecting it? That one answer decides whether time works for you or against you.

TWO

How many legs?

One, two, three or four. Each leg you add narrows the range where you make money, and lowers what it costs when you are wrong.

THREE

Is the risk capped?

Naked, or with a further-out strike bought to cap the loss. That strike costs you part of the profit and gives you a worst case you can survive.

Everything in the ten topics below is a combination of those three — except the last one. Calendars and diagonals trade time against time instead of strike against strike, which is why they come last.

Tuesdays · the desk

Last Friday's lesson, ten times

No teaching. The names are picked before anyone sits down, so the two hours go on order entry, exits, and reading what is already open. By the fourth week there are around two dozen positions open — too many to look at one at a time.

01The Greeks, every position, every time. Which way am I leaning, what does tomorrow cost, what happens if volatility moves, how fast does that change.

02One number for the whole book, beta-weighted against the index, from the very first session when there are four positions and it is boring.

03Ten on, and whatever is due comes off — because a rule says so, not because of how the screen looks that morning.

04One trade defended out loud. Why that name, those strikes, that expiry, and what would make you close it.

05The charter gets revised against what the book actually did. When the page and the book disagree, one of them is wrong and you have to say which.

40 days

when buying premium — you are paying for time, so buy plenty and leave before decay steepens

25 days

when selling it — you are collecting time, so take the stretch where it burns fastest

Every Tuesday, travel and holidays aside

Fridays · the classroom

On Zoom, and recorded

For people starting from nothing, and for anyone who wants to check the basics again. One structure a week, explained properly, with no open market competing for attention.

The order runs single legs before spreads, and naked before capped — because a vertical only makes sense once you have felt what the far leg is protecting you from. Buying a vertical and selling one get a week each; they are not the same lesson twice. The sequence alternates on purpose: buy something, then sell the same thing and watch every sign reverse.

Eight sessions, in the order set out below

The classroom, week by week

Ten topics in eight sessions, in this order. Each one is put to work on the desk the following Tuesday, ten times over, which is where it actually gets learned. No dates — the pace depends entirely on the room.

01Groundwork

The Language and the Chain

CoversTerminology, the Greeks, and how to actually read an option chain — strikes, expirations, bid and ask, open interest, implied volatility. Delta, theta, vega and gamma taught as four questions rather than four letters.

Watch firstSchwab — Getting Started with Options, the whole series · tastylive — Beginner Options Course

On the deskThese four numbers get read on every position, in every session, for the rest of the course. This is the only week that is pure groundwork, and it is the week worth slowing down for.

TakeawayEverything after this is a structure. This week is the vocabulary you need to describe one.

02Buy side

Buying It Outright

CoversLong calls and long puts. Then long straddles and strangles — which are both of those at once, for when you expect a move but not a direction.

Watch firstSchwab wk 2 — long calls · wk 3 — buying puts · OIC — volatility strategies (straddles & strangles)

On the deskBought outright at forty days, so there is time for the move you are paying for.

TakeawayYou own the move and you rent the time. The rent comes out every day whether the move shows up or not.

03Sell side

Selling It Naked

CoversShort calls and puts, then short strangles and straddles. Every sign from last week reversed — time now pays you, falling volatility helps you, and the loss on the other side has no number attached to it.

Watch firstSchwab wk 6 — cash-secured puts · Schwab — short straddles vs. strangles

On the deskSmall size, and two positions rather than ten. Uncapped risk is worth understanding well and holding rarely. The fix arrives two sessions later.

TakeawaySelling naked pays you a little on most days and can take it all back on one.

04Buy side

Buying a Vertical

CoversLong call verticals and long put verticals. You are still paying, so the clock still runs against you — but the strike you sell above pays for part of the one you buy. That caps what you can make and cuts what it costs to be wrong.

Watch firstOIC — bull call spread (debit call spread) · OIC — full strategy library

On the deskForty days. This is the structure the desk has been running since the first week — now the room knows why it is built the way it is.

TakeawayThe leg you sell is not protection. It is a discount, and what it costs is every dollar above that strike.

05Sell side

Selling a Vertical

CoversShort put verticals and short call verticals — the naked short from session three with the disaster bought back. What that far leg costs, and exactly what it buys, now that everyone has traded without it.

Watch firstSchwab wk 7 — short put verticals · wk 8 — short call verticals · Schwab — a vertical on the Risk Profile tool

On the deskTwenty-five days, sold around thirty to forty delta. From here this and the long vertical are most of what the book holds.

TakeawayA credit spread is a naked short with a known worst case. The far leg is what you paid for that.

06Sell side

Two Spreads at Once

CoversCondors — call, put and iron. The name sounds exotic and the thing is two verticals on the same stock at the same time, which is why it arrives the week after verticals and not before.

Watch firstOIC — long iron condor · OIC video library

On the deskBuilt from parts everybody has now traded separately, so assembly takes minutes rather than a lesson.

TakeawayMost intimidating option names are two familiar things standing next to each other.

07Both sides

The Trade That Pays You Last

CoversButterflies — call, put and iron — and then the unbalanced, broken-wing versions, which are butterflies with one side deliberately wider than the other and a different risk profile because of it.

Watch firstOIC — iron butterfly (video) · long iron butterfly · short iron butterfly · Schwab Network — butterfly & calendar basics

On the deskShown at forty days, twenty-one days and five days, so you can see the gap between the payoff diagram and what it is worth today.

TakeawayThe payoff diagram is a picture of expiration day. Expecting it to be true beforehand is how people talk themselves out of a working trade.

08Time spread

Trading Time Against Time

CoversCalendars and diagonals — the only structures here that stop spreading across strikes and start spreading across dates, with the two legs sitting at different points on the same decay curve. Rolling arrives with them, because a calendar is a trade built to be rolled.

Watch firstOIC webinar — what are calendar & diagonal spreads? · OIC — long call calendar · long put calendar · Fidelity — long diagonal with calls

On the deskOne opened and then followed down to the wire, with the front month rolled or closed and the decision defended either way.

TakeawayRolling is a decision, not a rescue. The test is whether you would put the new position on from scratch today.

Where the videos come from

Schwab — Getting Started with Options

A ten-part sequence in almost the same order as the sessions above, on the platform everything here is traded on. The closest thing to a companion course this syllabus has. Schwab Coaching also runs a matching YouTube playlist and an advanced strategies playlist.

The Options Industry Council

The industry's own education arm — free, no account, nothing being sold. A page per structure with the payoff, the Greeks and the maths, plus a video library and a YouTube channel. The best reference here, and the driest.

Fidelity — Options Strategy Guide

Free and open to anyone, account or not. The most complete written guide to the awkward structures — diagonals in particular, which almost nobody covers properly on video.

tastylive Learn Center

Free courses, strongly opinionated, heavy on selling premium rather than buying it. Useful because the house view is stated openly. Take the mechanics and argue with the conclusions.

Reading the chart is its own lineage

This course teaches options, and only options. Not on the syllabus at any point:

• Technical analysis and chart reading
• Support, resistance and levels
• Fundamental analysis
• Stock screening and selection

All of it is real and all of it matters. It is a separate lineage of practice, with its own teachers and its own literature, and running both through the same two hours does neither of them properly.

Separate does not mean unsupported. Two decks cover that side — one on chart reading, one on indicators — and both are available on request. The charts are on screen every Tuesday and the room does not stop to explain them, so it helps to arrive knowing what you are looking at.

Want the decks? Ask, and they will be sent.

No dates, on purpose. This is an order, not a timetable. Some sessions take a morning and some earn a second week, and you only find out which in the room.

Nobody has to start at session one. That order is how it runs for someone beginning from nothing. Most people arrive knowing some of it already and join where they join. If you come in at the verticals, watch the two sessions before them first.

Everything here is taught and traded in paper accounts. Nothing on this page is a recommendation to buy or sell any security, and no performance of any kind is claimed or implied. It is a record of how a small group is learning, published in case it is useful to someone learning the same things.