# Option Prices & Pricing

back- You will see how to translate the information on a pricing screen into a range of exposure diagram.
- You will see how to think about and represent the Effective Buy Price of a purchased call option on Target (TGT).
- You will review how to make an option order verbally to a broker.
- You will review how the order affects volume and open interest -- two measures of transaction volume mentioned in the Option Market Mechanics mini-course.

People treat option pricing as though it was rocket science! The fact is that **the theoretical underpinnings of option pricing is almost laughably simple**. In this course, we take both a theoretical and practical approach — **explaining what the complex option pricing equations are saying in visual terms** and **showing how pricing information is displayed on a brokerage screen**.

The course…

- shows you how to read
**option pricing screens**and how to associate**range of exposure diagrams**to them, - describes the
**bid-ask spread**and shows how important it is when transacting in the option market, - offers an
**intuitive explanation of option pricing**, including a graphical illustration of “the Greeks”, - explains the concept of
**implied volatility**— one cornerstone to option pricing, - shows the
**strengths and weaknesses of option pricing models**, and - illustrates why the uninitiated get the impression that option prices behave so counterintuitively.

The snippet from the video you see above is from the lesson **“Visualizing Option Pricing”** and shows how to translate what you see on an actual, live pricing screen to the range of exposure diagrams presented in the Options Basics mini-course.

Our overall goal for this course is to give you an **understanding of option pricing that is more intuitive and thorough than that of many professional traders and risk managers**.

### Supplemental Resources