Key takeaways from this Investrade webinar include (1) the core mechanics of exercise and assignment, (2) what actually drives options pricing, including intrinsic vs. extrinsic value and the role of the NBBO and (3) how volatility and time decay shape outcomes, plus when dividends can create early exercise risk. To put these ideas into practice, open an Investrade account or log into an existing one and start trading on our Investor or Pro platforms.
Options can feel intimidating at first, but this Investrade educational webinar shows how the building blocks fit together. Investrade partnered with the Options Industry Council, the education arm supported by OCC, to deliver a clear, fundamentals-focused session led by Ken Keating, a principal at OCC Investor Education and an OIC instructor. Designed for newer traders and anyone looking for a reset, the webinar explains why investors use options and what actually drives option market behavior and pricing.
The presentation opens with exercise and assignment, reinforcing a core rule: option buyers have rights and option sellers have obligations. Calls convey the right to buy shares at a strike price, while puts convey the right to sell. Ken explains that most U.S. equity options are American-style, meaning they can be exercised before expiration, but early exercise usually only happens when there is a real economic incentive. He also addresses a common myth about options expiring worthless, noting that most contracts are closed out prior to expiration while a smaller portion are exercised or expire.
From there, Ken shifts to how options are priced in live markets. He explains that prices reflect real-time supply and demand from market participants like retail traders, institutions and market makers, with the national best bid and offer (NBBO) showing the market’s current consensus. He then breaks down moneyness for calls and puts and the difference between intrinsic value and extrinsic value, highlighting that extrinsic value is the “time premium” portion of an option and the part that decays.
Another major focus is volatility. Ken contrasts historical volatility, which is backward-looking, with implied volatility (IV), which is forward-looking and embedded in option prices. He shows how volatility changes can impact results even when the underlying stock moves in the expected direction. To help traders judge whether options are relatively expensive or cheap, he introduces IV Rank and IV Percentile as practical analytics.
The session wraps by focusing on theta and time decay, emphasizing that decay accelerates as expiration approaches, and dividends, explaining how dividends can shift option values and create early exercise risk when dividend value outweighs remaining extrinsic value. Overall, this webinar offers a solid foundation for understanding what moves option prices and what risks matter most when trading options.