In 2012, my first options trade lost $9,000.

12 months later I was making $1,100 per week trading in my free time.

What changed?

I read 20 books on options and finished a master’s degree.

But what took my game to the next level was Python.

Here’s the code I still use today:

A quick primer on options in case you're not familiar:

• Over $450 billion in notional trades DAILY
• 39 million options contracts trade DAILY
• 25% of total options trading is from retail

So how do we make money?

Trade options with a simple, 3-part framework:

1. Design your risk
2. Value the position
3. Measure and monitor

Now pair this framework with Python and you get a potent combination for making money trading options.

Let's dig in:

To design our risk profile, we need the option payoff.

Let's start by defining the variables we need:

• Stock price
• Strike price
• Time to expiration
• Interest rate
• Volatility

We also define market prices for demonstrating trades.

Remember our payoff functions for calls and puts?

• call = max(S - K, 0)
• put = max(K - S, 0)

We can define them in Python in one line of code each.

And here's where it gets really interesting.