Your Options Handbook: The Practical Reference and Strategy Guide to Trading Options

ISBN-13: 9780470603628 / Angielski / Twarda / 2011 / 432 str.

Jared Levy

Opis

A comprehensive yet simplified guide to the complex world of options investing and risk management Before trading derivatives, one needs to understand the secrets and mechanics behind the options market. Your Options Handbook: The Practical Reference and Strategy Guide to Trading Options offers a straightforward, practical explanation of the options marketplace, including its origins, the mechanics of the market, and how to profit from trading options.

• Walks you through the stock and option markets from a professional's perspective, but uses plain language and simple analogies
• Discusses different trading strategies based upon whether one's opinion of the market is bullish, bearish, or neutral
• Details market players, useful tips, and trading psychology, and explains how options are priced

Options are a versatile trading instrument that typically cost less and can have lower risk than stocks. They also offer investors a unique edge and lucrative opportunities that are not available to stock only traders. Your Options Handbook helps investors fully understand the options market, allowing them to enter the sector with greater ease.

Spis treści

Foreword xi

Preface xv

Acknowledgments xxvii

CHAPTER 1 Market Basics and Market Mechanics: What Is Going On and How Does It All Work? 1

The Markets 1

Sectors and Industries 9

ETFs A Different Kind of Investment 12

Final Thoughts 16

CHAPTER 2 Data That Moves the Markets: The First Step in Your Analysis 17

Data and Sentiment 18

Economists, Predictions, and Indicators 18

Economic Indicators 21

Key Indicators to Watch 27

Final Thoughts 43

CHAPTER 3 Fundamental and Technical Stock Analysis and Tools: The Second Step in Your Analysis 45

Introduction to Fundamental Analysis 46

Digesting the News 57

Cheap versus Value 61

Mergers and Acquisitions for the Everyday Options Trader 64

The Wisdom (or Lack Thereof) of Crowds 65

Trading Tactics and Technical Analysis 67

Plans of Attack 93

New Trader Tips 101

Top 10 Things Professionals Do That the Average Retail Trader Doesn t 104

Final Thoughts 106

CHAPTER 4 Options Basics: Techniques and Fundamentals to Master Before Applying Any Options Strategy 107

The Oracle of Omaha Did It, Why Can t I? 111

The Basics 114

Trading Options Order Types 122

Options Expiration in Detail 126

Exercise and Assignment 128

When Should You Exercise an Option Early? 132

What Is Triple Witching? (Or Quadruple Witching) 134

Final Thoughts 137

CHAPTER 5 The Greeks: The Forces That Influence Options Prices 139

Delta 139

Final Thoughts 156

CHAPTER 6 Strategy: The Basic Options Trades 159

Basic Single Options Strategies 160

The Long Call 160

Covered Call (Buy–Write) 171

Buy–Write versus Covered Call 175

Long Put 181

Basic Stock and Options Spread 195

Final Thoughts 208

CHAPTER 7 Strategy: The Basic Spread Trades 209

Vertical Spreads in Depth 209

The Four Basic Vertical Spreads Basic Characteristics and Behavior 214

Credit Spreads versus Debit Spreads 216

Credit Vertical Spreads 219

Debit Vertical Spreads 236

Buying a Put Spread (Bear Put Spread) 237

Buying a Call Spread (Bull Call Spread) 242

Market Direction Neutral Spread Strategies 257

Final Thoughts 271

CHAPTER 8 Strategy: The Advanced Option Spreads 273

Market Neutral, Volatility, and Earnings Spread Strategies 273

Butterflies versus Condors 281

Iron Spreads 285

Iron Butterfly versus Iron Condor 286

Final Thoughts 309

CHAPTER 9 Advanced Concepts 311

Put–Call Parity, Interest Rates, Dividends, and Forwards 312

Synthetics and More on Put–Call Parity 316

Final Thoughts 336

CHAPTER 10 A Revolutionary Approach to the Mind Games of the Markets: Understand Why You Need Emotions to Trade Well 337

Trading Is Like Weather Forecasting 338

What Is Psych Cap? 345

Strategies and Tactics for Large Psych Cap Balances 352

About the Contributor 359

CHAPTER 11 Turning Your Trading into a Business 361

Learning the Dollar 362

Education 362

The Formative Process 363

Tips and Formulas for Budgetary Success 364

Setting Up a Legal Entity 366

Guidelines, Indicators, and Birds of Prey 371

Final Thoughts 381

About the Contributor 381

Notes 383

About the Author 389

Index 391

O autorze

Jared A. Levy got his start trading as an options market maker and specialist in the pits of the Philadelphia and American Stock Exchanges in the ′90s. Now as an exclusive CNBC contributor, he offers his commentary to the world as part of CNBC′s Fast Money team and appears on several programs throughout the network. Jared is also featured and quoted in numerous industry publications both online and in print. He has been featured on Bloomberg, Fox, and several other radio and TV networks over the years. In 2006, he won an Emmy for his daily video, "Trader Cast." More recently, he served as the Senior Derivatives Specialist for PEAK6 Investments, L.P., and is currently an editor for Taipan Publishing Group.

Through his many seminars and courses, Jared Levy has educated tens of thousands of investors on how to successfully and consistently trade and invest for a living, while keeping risk low. He teaches a practical, straightforward approach to investing that involves analyzing equities, derivatives, and the markets as a whole, as well as both simple and complex strategies and the use of diverse instruments.

Blurb

Brings the complex world of options down to Earth for investors of every stripe

For those in the know, options can be a relatively inexpensive, low–risk alternative to futures, swaps, and other common hedging and trading instruments. They also offer investors a unique edge and profit–taking opportunities not available to stock–only traders. Your complete guide to all things option, this book quickly gets you up to speed on what you′ll need to know to confidently and successfully trade options, whatever your particular investment needs and goals.

Written by one of the most respected options traders and educators in the United States, Your Options Handbook features straightforward, practical explanations of the options market including its history, conventions, and customs various types of options and their uses, and common trading techniques and methodologies. Writing in plain English, options whiz kid Jared Levy:

• Walks you through the markets from a professional′s perspective, using plain language, simple analogies, and real–world examples to illustrate his points

• Describes market players, options pricing and valuation methods, and trading psychology

• Explains the complex mathematics behind options pricing and trading strategies in a way that even math–phobic investors will find easy to digest

• Discusses major trading strategies and helps you design an approach tailored to your personality, needs, and long– and short–term goals

Don′t be put off by the seeming complexity and obscure jargon associated with the options market. Let Your Options Handbook get you up and running with the basic knowledge and tools you′ll need to take full advantage of one of the most versatile and accessible of trading instruments.

PRAISE FOR YOUR OPTIONS HANDBOOK

"The details, insight, and tactics that Jared offers are priceless; it′s a must–read for both beginning and experienced traders!"
JOHN WALLACE, former chairman of the Philadelphia Stock Exchange

"To succeed with options, it′s crucial to bring the subject into the context of real–world trading considerations such as technical and news analysis. Your Options Handbook fulfills that criteria beautifully. It is a practical guide that gets to the point quickly and is packed with valuable insights that could only emerge from an experienced expert."
GUY COHEN, author of The Bible of Options Strategies

"If you cultivate a genuine appreciation for the process of becoming a successful trader, and study Jared′s book, the journey will be a lot less arduous and definitely more fun."
MARK DOUGLAS, author of The Disciplined Trader and Trading in the Zone