Trading Options Using Math: A Mispricing Strategy Made Simple (Download Spreadsheet Here)

An easy-to-understand tutorial article coupled with a video. Learn the basics of theoretical options pricing and how you can exploit other traders' irrationality by capitalizing on option mispricings.

When you’re eating at a restaurant and see that a bottle of water costs $10, it doesn’t take much to recognize that you’re getting ripped off. So, if you can figure out when you’re getting a bad deal with only $10 on the line, why aren’t you doing it when there are hundreds or thousands of dollars on the line in your options trading? Well, as you probably know, buying options isn’t as simple as buying bottled water. Still, there are measures we can take to make the process of valuing an option and figuring out a profitable trade a whole lot simpler.