COSMIC:  Options strategies are as close as we get to individual stock trading… takes too much dinaro to diversify a stock portfolio to earn at the same level as using derivative concepts on futures or options. Using a lot less cash, we concentrate on the most straight forward, least confusing, entries in the market. These "best case" option trade opportunities are designed to offer high probability entry with specified exit target or stop.

An option gives a trader the right to buy or sell the underlying instrument at the strike price, within a specific period of time.  A call option gives the trader the right to buy an entity and a put option gives the trader the right to sell something. 

Financial Engineering is the practice of using derivatives as building blocks to create specialized products.  As the field of financial engineering has grown, the use of options to create synthetic positions and to hedge cash positions has tremendously expanded. 

A Synthetic Position is the simultaneous buying and selling of opposite options.  For example: if a trader feels that the price of the underlying instrument is going to decrease but does not want to take a short position in fear of a short-term rally, he or she could buy one put and sell one call at different strike prices and time frame. The premium is the price of the option and is composed of two elements: intrinsic value and time value.  An option is said to have intrinsic value if the option is in-the-money. When out-of-the-money, its intrinsic value is zero.

The intrinsic value for an in-the-money option is calculated as the absolute value of the difference between the current price (S) of the underlying and the strike price (K) of the option, floored to zero.

IV = max{0, | S − K | }

More specifically, for a call option IV_call = max{0,S − K}

while for a put option Input = max{0,K − S}

For example, if the strike price for a call option is USD 1 and the price of the underlying is USD 1.20, then the option has an intrinsic value of USD 0.20.

The total value of an option is the sum of its intrinsic value and its time value (intrinsic  value 9). We prefer to use options in several strategies from creating artificial stops, to taking advantage of markets that are at extremes, and to generate consistent profit by writing options that are counter trend, which are selected by using delta and applying some specific formulas to the option Greek.  The delta measures the sensitivity to changes in the price of the underlying asset. The Δ of an instrument is the mathematical derivative of the option value V with respect to the underlyer's price: 

DISCLOSURE: The High Degree of Leverage Often Obtainable in Commodity Trading Can Work against You As well As for You. Use of Leverage Can Lead To Large Losses As Well As Gains.