I wasn't expecting that freaking voice crack good morning. Everybody welcome to trey's trades. How are we doing it? Is your boy trey, i think that's what they freaking call me. We're gon na give you a short video this morning, as i've been asked by lots of new apes out there about call options.

We're gon na make this as short, simple, sweet and to the point as we possibly can, so that you can utilize call options. If that is something that you are interested in doing, i have a video that i've used before it's a little bit longer. It's about 25 minutes, so i'm gon na try and keep this nice and sweet and explain this to you in a very simple ape language way. So let's just get right into this video, so i can save as much time as possible.

So there's a couple things that you want to know about call options before you start rocking them and it's these specific terms: gamma delta and theta. These are the greeks which explain to you essentially how call options get their intrinsic value and then in the money out. The money and then the potential risk of each of these, which you can associate with premium right, that was a weird-looking p, but nonetheless we're gon na go over each of these terms. So first i wan na start off with the gamma, the delta and the theta.

So if we come over here to the options chain on amc right call, options are a great way to leverage cash in order to understand how much money you're making with your call option. You want to understand these greeks, so delta is the first thing that we're going to start with right. So this is how much you make per share, because a call option has 100 contract or 100 shares per contract right 100 shares of contract. You would make 64.5 cents with every point change on your call option.

That is what the delta is. It tells you how much intrinsic value you are gaining per share for each contract right. So if you were to gain 64.5 cents right on each point, change that would mean that you're gaining 64.50 with every point change on on your call options right, because, if there's 100 shares per contract, that means that you multiply this number by 100, which gives you 64.50 right, this tells you how much you're making now on top of that you've got the gamma. The gamma tells you what that point.

Change is right, so, if you, for example, here you've got one cent, is the point change on on the gamma here, meaning that every time this goes up one penny you are making 64. and 50 cents plus. If you multiply this point, zero one times 100. That would give you one dollar and ten cents so with each individual point, move, which is this gamma right here, right, you're, making just under 66 bucks for the leverage that you have on that individual call option contract.

So, let's just say the 55 dollar strike right. So that is delta, that is gamma. The delta tells you how much you make the gamma tells you what it takes to make this this delta right and the theta is the last thing that's really important to understand and that you can think of as time decay. It is how much you know: value intrinsic value.

Your contract loses with each passing date and there's something that you're going to notice with all three of these different numbers. Right, you'll notice that the delta will go up and the gamma will go down as this continues to run what we call in the money and i'll explain that term to here in a second. But it essentially just means that the strike price of your call option is trading underneath the current market value. So if we're turning at 55 dollars right now, that would mean that 53 is currently in the money.

So this delta - and this gamma, you will see you know, reflect essentially the deeper they get in the money. You make more money, the deeper gets in the money and it takes less of a you know: a swinging stock price or less gamma to make that cash. In the same way, you lose less theta right. You have less data on the table.

The deeper these running, the money means there's less time decay. You lose less intrinsic value on your strike on your call option as it continues to run in the money right. So looking at the 55 dollar strike, there's a dollar and 58 cents theta right now. For this friday's 55 strike, meaning that, with each passing day, you would lose about 158 dollars of value if it were to stay exactly flat on the stock price right and how much did that actually be well.

The contract is trading right now, on the ask side. At 10.70, a share which means 1070 for a single contract right. It would mean that you're losing somewhere between 10 and 15 of your overall value of that call option simply by the date passing if there's not any volatility to drive the price up on your call option right. So that is what each of these three greeks meet.

As you get deeper in the money, the theta goes down, you lose less intrinsic value, there's less time, decay on your call option and the further out the money, the more risk you have with theta, gamma and delta right. You don't make as much on delta. You don't make as much on gamma you don't you lose more value on theta and these are riskier call options right. So next i want to get into the following term, which is in the money and out the money.

So in the money refers to, as i've mentioned, before, a call option that is less risky right. You hold on to that intrinsic value, much better, because the theta is is uh, lower right, the deeper in the money. This is the less time decay you have and also the delta and the gamma is going to pay you more handsomely. It's just a more expensive call option contract right now, a lot of where your money comes from.

Is these out the money contracts right so out? The money contracts are strike prices above the current market value and, while immediately you have a lot of time decay on the table. These are the riskier bets. Essentially, that can really make you a crap ton of money right so, for example, looking at this right now, if you look at this, the we'll just do a 70 70 strike. The delta on this is 50.2 cents, meaning you make 50 for every one cent swing on the stock, but the deeper they start to run in the money.

You make up a huge chunk of change for those to run in the money right. You get a large chunk of. What's already, you know, included in the intrinsic value in these other strike prices. For example, look at this.

The 54 dollar strike, as of yesterday was worth 11 and five cents. Now, if you're to go one, two, three four five, six, seven, eight nine ten dollars up, you would gain three dollars per share per contract right, which comes out to 300 bucks. It's a 300 difference for a single contract if this was to run in the money. Just based on that simple arithmetic, obviously it's more complicated than that you've got the delta game on theta, which all contributes.

But you get my point right these out. The money call options are riskier, but they usually pay more handsomely. An easy way to think about. This is with the risk and the premium right.

This is going to tell you the entire story, to make this super simple, think of premium as auto insurance right, so you are going to pay more premium for a more secured. You know auto insurance right to secure your vehicle, better you're, going to pay less premium less insurance to not protect your vehicle as much so for out the money call options the premium on these is usually cheaper. You can think of it as i'm paying less premium for less security right, i'm willing to take more risk to potentially make more money the deeper in the money call options you can think of as higher premium, because you're paying for more insurance right. You want to hold on to that intrinsic value.

You have less overall theta or the time decay, which gives your call options that intrinsic value right. So this entirely comes down to your specific call option strategy, how much risk you like to take myself. Personally, i like to play just barely out the money, especially with some volatile call options right, and this is a great example of volatility. It is right now, so you know the 58.60 that's more my cup of tea, but if you like to play less risky you're looking for maybe a 20 50 60 70 gain on a call option with some volatility right, you can play in the money and you're Still gon na make some decent cash.

You just have to have the liquidity to be able to purchase these call options that are in the money because they are more expensive. If you're gon na pay that extra premium for the extra insurance in the money call options less risky out, the money call options more risky, that's as simple as it gets so now you know to buy a call option, you buy it to open and you sell It to close now, what does that mean? It means that you want to hit the ask if you want to buy a call option so, for example, if i want to buy the 60 strike, what i would do on weeble anyways is hit this 9.30. You know premium level, which is 9 and 30 cents per share, which comes out to 930 a contract. I would hit that and then i would want to you know, enter how many i want i would hit unlock trading, i would hit buy and then i would have these.

You know. If i wanted to buy 10, i would have 10 call options now to get rid of these. It's very simple. You sell it to close, meaning that just the same as a share, you would want to sell these.

If you don't plan on exercising which we'll get into here in a second, you would want to sell these call options to lock in that that premium and that liquidity that you've earned from the run-up right now. There's a couple different strategies that you can use with. Call options if you'd like to you know either average down on a stock, or you know, create some gamma squeeze gamma squeeze, meaning that you've got call options that were previously out the money you bought call options. Let's say it's: 60 bucks.

65.70. The stock price is trading at 50., it runs over 60 bucks and it can cause a gamma squeeze. Market makers prepare for something called exercising contracts right now. What this essentially means is that people who have call options that are in the money they can choose to exercise these if they like, meaning that you have the right, not the obligation to purchase a hundred shares at your designated strike price per contract that you have Since one contract is worth 100 shares, it means that that's what you you can buy it for right.

So, for example, let's say that i was able to pick up these 40 strikes. You know for june 11th and i got them three months ago. The premium on them at the time - let's say it was two or three dollars per share, which means it was two or three hundred bucks. It would be worth it in that scenario to be able to give up that premium, because that's what you would do right.

You would pay that premium to be having the right to purchase 100 shares at 40 right. So what would the cost be if i want to exercise at that 40 strike? Let's just do the math really quick, so if it's a 2 premium per share, that means that you are paying 200 right so 200 bucks for that premium. You give that up right, you're, paying that premium essentially to be able to lock in that 40 strike. So your total cost, for this would be 40 times 100 right, which would come out to add these zeros four thousand dollars, plus that 200 premium that you gave up, you might think to yourself.

Is this really worth it and in certain scenarios it is? It depends entirely on, i think, one main factor, which is: how much did you pay for that premium? If i paid a premium on these 40 strikes of 17.75 cents a share or 1700, it's not worth it at that point to pick up these 40 strikes. But if you have, you know to exercise them, i should say, but if you have you know a 40 striker, you have a previously out the money call that is very deep in the money now and you want to exercise it. You want to give up that premium for the cheap strike price, that's an entirely different scenario that can actually create buying pressure. So those are the scenarios in which i think it's actually okay to exercise call options.

So this is kind of a brief walk-through talk through. If you don't want to exercise a call option, you do not have to right. Another strategy that you can actually employ is, if you don't have the liquidity to exercise, meaning that you don't have the money available. Let's say that all you have in your brokerage.

You know before these contracts is, like, i don't know two thousand dollars right, but it costs you forty two hundred dollars to exercise fully to get these forty dollar strikes on one contract. Well, what can you do? Is you can sell if you have other call offers that are deep in the money and get those you know the liquidity from those contracts in order to exercise, if that's something that you'd like to do, that is a strategy right. So those are just some different ways that you can take advantage of. These call options, the liquidity that they can make you the leverage that they offer.

You just know this. They are risky call options are risky. If you're wrong, you can lose that premium right. That's where the risk factor comes into play.

Do you like to play in the money? Do you like to play less risk? Do you like to play out the money or you don't more risk, it's entirely up to you, but this is a great way to leverage and it's a great way to make money, especially in volatility right. You don't want to play call options with stocks that are flat. That is the best case scenario for market makers. Is stocks are flat? They don't like seeing that they love, seeing that i should say, because that means that call options typically expire worthless and they just collect all that premium.

But in a situation like amc, you can really leverage pretty heavy with some call options to make great money to either a buy stock b exercise. Those calls or c do whatever you'd like to do right. So this is kind of a brief walkthrough talk through on call options. I know there's a lot of new people out there who are asking questions about them.

Hopefully that helps you out. That's what i've got for you guys so blah blah blah. I know the whole shield drop a like and subscribe whatever you want to do my friends catch you on the next one, much love and peace.