 Before you start trading options, make sure you understand the Greeks, because if you don't, you can lose a lot of money. Over the past year, I studied options trading, buying, selling them, understanding the Greeks, what we're talking about today. And of course, over the past year, I lost some money, I made mistakes, but the most important thing is that I actually learned from my mistakes, I avoided them and started making money consistently. So much so that I dedicated the last couple videos on my YouTube channel to options trading because that's all that I do right now. My goal with this series is to give you enough information before the new year so you can start trading options starting January 1st. Don't start your new year's resolution on January 1st. Start today, educate yourself so you're ready for the new year. So in today's video, I wanna talk about the Greeks. It looks like it's a bunch of numbers and it looks complicated. I know, trust me, as soon as you're done with this video, it will make a lot of sense. In general, the Greeks basically tell you how an option price will change to a specific circumstance. I will use my personal LEAP option on Apple again in this video so you have a real-life example and know exactly how it will affect my option. Let's start with Delta. Delta shows you how sensitive an option contract is to a $1 change of the underlying stock. Let's look at my LEAP option. So this contract has a Delta of 0.7924, which means if Apple, which is the underlying stock, increases or decreases by $1, my option contract will increase or decrease by $79. The current value of my option is $32.75 because one contract always handles 100 shares. That means my contract is worth $3,275. If Apple's share price increases by $1, my contract would increase by 0.7924 to $33.54 or $3,354, which is an increase of exactly $79. For call options, a Delta has to be between zero and one. And for puts, a Delta has to be between minus one and zero. Okay, moving on to Gamma. So Gamma shows you how Delta changes when the underlying stock increases or decreases by $1. So if Apple's stock price increases or decreases by $1, my Delta will change by 0.0066. Moving on to Theta. Theta is showing you how much money you lose or gain per day. It's basically showing you time decay. If you buy an option, Theta will be negative, but if you sell an option, your Theta is positive. In my example, I purchased a LEAPs option on Apple, which means my Theta is negative and my contract value decreases in value by $3. Each day. If Apple trades sideways for a week, theoretically I would lose $21 due to time decay. So now let's move on to Vega. Vega is correlated to implied volatility and Vega shows you how much your option contract will increase or decrease in value by a 1% change in implied volatility. Let's take a look at my LEAPs option again. My Apple option has a Vega of 0.3376, which means every time implied volatility increases or decreases by 1%, my contract will gain or lose $33.76. Implied volatility is not a Greek, but just one side note. If implied volatility is above average on a specific option, it's good to sell options to secure a higher premium. And if implied volatility is below average, it's a good time to buy options because the premium you have to pay is lower. I will make sure that I create a separate video just about implied volatility because I don't wanna mix them up right now. It's not a Greek, I just have to mention it. I thought it was important. And last but not least, Rowe. Rowe shows you how much your option value changes to a 1% change in interest rates. As a beginner, I personally wouldn't spend too much time dissecting each contract, dissecting Rowe every time, but it's just important to know what will happen to your contract if interest rates go up or down. All right, so now that you know what the Greeks are, let's see how you can use them to your advantage. Okay, let's start with Delta again. So when you look at deep in the money contracts, you will always find a higher Delta, which means the chances of this contract expiring in the money are very high. Therefore, you also have to pay a higher premium because the chances of you expiring in the money are higher, so costs more money. If an option becomes very deep in the money, Delta can increase to one, which at that point makes your contract basically increase in value by $1 the same as the stock price. And as I said, the higher Delta, the higher the chances of you expiring in the money. Then we're moving on to Gamma. If you see a high Gamma, that means it's a risky trade. Why? Because every time the stock price increases or decreases by $1, your Delta will change due to a high Gamma. If you have a 70 Gamma, that means your Delta will increase or decrease by 70 every time the stock price increases or decreases by $1. All right, so here we go. Let's do it one more time. High Gamma. As we learned before, your Delta changes the option price and your Gamma changes your Delta. So if you have a high Gamma, that means it's a risky trade because every time the stock increases or decreases by $1, your Delta changes by this high number of Gamma. So high Gamma, risky trade. All right, now we're moving on to Theta. Theta is the time decay. Depending on your strategy, if you're buying or selling contracts, your Theta is different. So if you are an option seller, you want a high Theta because a high Theta means that's the money you gain every single day due to time decay. If you're an option buyer, you want a low Theta because you don't want to lose money every single day. I mean, you will lose money to time decay, but you want to minimize that to a minimum. And last but not least, Vega. As I mentioned before, Vega is correlated to implied volatility. And here's one important thing that I learned for myself. I made a lot of mistakes because I wasn't aware of it. That's why I want to really talk about this. You want to make sure that you buy or sell contracts only if implied volatility is in your favor. Because at some point, implied volatility will come back to its average and then you will make money just by that implied volatility change. And if you have a high Vega, you will know exactly how much that change will be. So you can technically make money buying or selling options if you understand the implied volatility changes. Another important note is that Vega declines the closer the option gets to expiration date. So the closer you are to the expiration date, the smaller the Vega, which means even if implied volatility changes a lot, your Vega will be very small. So therefore the option contract won't change a lot. That basically means the less time your contract has left, the smaller the price changes will be caused by Vega. So before you jump in and buy and sell contracts because you believe a stock will increase or decrease in value, make sure that you look at the Greeks, understand by how much your option contract will change due to a $1 increase or decrease, implied volatility changes, look at every single one of them, and my suggestion is look at a contract, just buy it on paper and look at it after a week. Go back to the same contract, look it up and see how it's doing. If you understand the Greeks, this will save you a lot of money by simply reducing the risk of making stupid trades. Have a good one.