Over the past ten years, options trading has become highly popular, especially among traders who want to make more money while taking fewer risks. But not everyone does it the same way. Some people go with their intuition, while others look to the news and social media for guidance. But trading options with numbers is a wiser, more data-driven way to do it.
This book is for folks who have never traded options before and want to learn about it in the easiest way possible. We’ll discuss the basics, why this method is useful, and how to begin using QuantInsti’s structured options and futures trading classes.
What does it mean to trade options in a quantitative way?
When you trade quantitative options, you employ computer algorithms, statistical methods, and mathematical models to help you make decisions. Instead of guessing which way the market will move, traders use historical data and analytics to come up with, test, and put into effect trading methods.
It means doing business in a scientific way:
- collecting and looking at a lot of market data
- Making models to find good business opportunities
- testing the models with data from the past
- Making choices based on facts instead of feelings
What Makes It Better Than Trading Options Normally?
Most conventional traders employ simple technical indicators or their gut reactions. But quantitative traders believe in numbers. The quantitative method differs from conventional trading for the following reasons:
Algorithms never change; they always work the same way. They stick to the rules.
Speed: Computers make trades straight away.
Tested Strategies: You can see how likely something is to work before investing.
Diversification makes it simple to keep track of and handle several distinct methods at once.
Institutional and experienced retail traders use this strategy because it greatly reduces the chances of making mistakes and letting emotions get in the way.
Getting to Know the Basics: Options and What They Can Do for You
Let’s go over the basics before we move on:
- A call option lets you buy shares at a set price before they run out.
- A put option lets you sell shares at a specified price before the option runs out.
- The price at which you can use an option is known as the strike price.
- Premium: The cost of the option.
- The last day you can use the option is the day of expiration.
- Payoff: The option’s gain or loss dependent on how much the underlying asset is worth.
- To do quantitative options trading, you need to know these things and use math to make the best selections based on them.
What You Learn in an Options Trading Course
QuantInsti’s full options trading course lets you start from scratch. You learn:
The basic words and ways that the stock market works
How derivatives and options work
Bull call spreads, iron condors, straddles, butterflies, and other option strategies
How to figure out how likely it is that you’ll make money
How to use tools like Python, Matplotlib, Pandas, and Mibian
How to leverage old data to test strategies
How to get the most out of trading with technical indicators
Making a screener to locate the best deals
Your strategy could include trading with real money or paper money.
These are taught through interactive coding exercises, videos, and advice from the community to make sure you comprehend the ideas in a real way.
Tools and Languages You’ll Need
In quantitative options trading, coding is quite important. Here are the languages and technologies that most people use:
Python: To make and test plans for backtesting
Pandas and NumPy are libraries that help you work with and do math on data.
Matplotlib: For making graphs
Mibian and Scipy statistics: For choices about data and price
QuantInsti’s options trading course teaches you all of these techniques through hands-on activities.
Why Learn with QuantInsti?
QuantInsti is one of the greatest places to learn about algorithmic and quantitative trading. They want to make quantitative options trading and algorithmic trading open to everyone. Their learning tracks are made to aid you at every level, no matter how much experience you have in the market.
Some of the best things about them are
- Paths for Organized Learning
- Initiatives for trading in real time
- Assignments for the Capstone
- Activities that include the community in support
- Access to Courses for Life
The Next Step: A Course on Trading Futures
The next thing you need to do after learning about possibilities is to learn about the future. The goal of QuantInsti’s Futures Trading Course is to show you how to trade futures in a planned method.
You learn this:
- Basics of futures: clearing, margin, and making things the same
- Strategies that go with the flow and against it
- Making, testing, and looking at plans
- Sizing positions and managing risk
- Yield and term structure that are implied
- Capstone project and trading experience in the real world
- You can also utilize volatility parity and Sharpe ratio calculations to help you diversify and size your positions. Professionals in the field, like Andreas Clenow, lead the training.
How to Trade Options in a Systematic Way
Here’s an easier example:
What is a strategy? For example, you might choose to apply the iron condor strategy on Nifty.
Screening: Use a screener to find options that are easy to trade and have a lot of open interest.
Model Profitability: Use Python to find out how probable it is that you will generate money.
Backtest: Test the strategy with data from the last two years.
Follow the Rules: Make guidelines for taking profits and stopping losses.
Paper Trade: Try out the method in a false scenario.
Live Trade: Start with a little bit and add to it as your model does well.
This strategy makes trading less of a guessing game and lets you make decisions based on numbers.
Who Should Sign Up for This Course?
- People who are new to options and futures and want to learn the basics
- Traders who desire to go from trading by hand to trading by computer
- People who know how to use technology and want to build models
- People who work in finance are getting better at what they do.
- You can start with the basics and go at your own pace, even if you don’t know much about finance.
Case Study: How an Instructor Used Quantra Options Trading
Being based in Chennai, India, it’s his job to teach people how to run tourist and travel businesses. Dealing stocks is new for him, but he’s becoming increasingly interested in dealing options. He searched for a place to learn that was well-organized and easy to understand. QuantInsti helped him find Quantra. “Options Trading Strategies Using Python: Basic” is the course he chose to take.
Jaideep, who has a degree, said that the course was easy to learn and understand because it had subs and used Indian cases. It was easy for him to see how far he had come and go over what he had learned because the tests were well-made. The experience was easy and inspiring because of this.
A lot of people who were just starting out found the step-by-step instructions for installing Python and the Jupyter notebooks very helpful. Jyotish said the training was better and easier to understand than what he could find online for free. It also taught him how to use Python in real trade situations.
He wants to take more Quantra classes to learn how to trade and use Python better now that he has a good base.
“The course helped me become a better trader by making hard ideas easier to understand and giving me useful tools.” I can’t wait to find out more about Quantra. Hi, Jyotish Spencer.
Last thoughts
Quantitative options trading is no longer just done by hedge funds. That being said, anyone can learn how to trade options in a way that makes them money. You can learn everything from the basics to useful trading methods on websites like QuantInsti.
Start your trading journey with QuantInsti’s options and futures classes if you want to lose weight and trade better. If you are new to trading, these classes will help you become a confident, data-driven pro.
Now is the time to learn more about the world of trading quantitative options!
Also Read: How to Steer Clear of Wrongful Trading Allegations as a Director
