High Performance Options Trading

High Performance Options Trading by Mobirao

This Book Includes:

CHAPTER 1 The Language of Options 1

• The Basics 2
• Listed Options 4
• Nomenclature 6
• Longs and Shorts 6
• A Bit More Terminology 7
• Offsetting Option Trades 10
• Expiration, Exercise, and Assignment 11
• American versus European 11
• Quotations 12
• The Special Properties of Options 14
• Time 15
• Volatility 18
• How Options Respond to Changing Conditions 18
• The Greeks 19
• The Role of the Market Maker 21
• Volume and Open Interest 22

CHAPTER 2 Option Strategies 25

• Long Call 26
• Short Covered Call 27
• Short Naked Call 29
• Long Call with Short Stock 30
• Long Put 30
• Short Covered Put
• Short Naked Put 32
• Long Put with Long Stock 33
• Equivalent Strategies 34
• Combinational Strategies 39

CHAPTER 3 Volatility 43

• Volatility Trading—Buying and Selling Volatility 44
• Tools of the V-Trade 46
• Selling High Volatility 47
• Buying Low Volatility 50
• Delta-Neutral Trading—In a Nutshell 54
• Seasonal Patterns in the Grains 55
• Other Commodities 59
• Volatility Skew—What Is It and How Can I Use It? 60
• Some Words of Warning about Naked Writing 64
• The Relationship between Volatility and Price 64

CHAPTER 4 The Option Trader’s Arsenal 69

• Buying Nearby Options—The Swing Trader’s Perfect Tool 69
• Debit Spreads—The Calm Approach 73
• Strategies for Trending Markets 76
• The Horizontal Spread—A Good Strategy in a Sideways Market 78
• Credit Spreads—Say “Don’t Go There” 82
• Condors—Two-Winged Creatures 85
• The Backspread—A Directional Strategy that Costs
• Nothing If You Are Wrong 88
• Covered Writing—Enhancing Your Returns 92
• LEAPS—An Alternative to Stock 95
• The Synthetic—Another Alternative to Stock 98
• The Butterfly Spread—When You Have a Narrow Target Range 100
• Using the Right Option Strategy 101

CHAPTER 5 Special Situations 105

• Playing Takeovers 105
• Letting the Options Market Tip You Off on Takeovers 107
• Covered Writing with Convertible Securities 111
• Investing in a Rough Market

CHAPTER 6 Theoretical and Practical Matters 127

• Options Pricing Models 127
• Coming Up with the Right Volatility 133
• Volatility Skew 134
• What Causes Volatility Skew? 136
• Balancing Factors 139
• Put/Call Parity 139
• The Greeks Revisited 141
• True Delta and Gamma 143
• Understanding the Limitations of Your Model 144
• Dealing with Anomalies and Pricing Difficulties 146

CHAPTER 7 Tips for Beginners 149

• The Psychological Battle 154
• Trading Mistakes and What I Learned 156
• Some Thoughts on How Trading Fits In with Real Life 158

CHAPTER 8 Encore 161

• Directional Trading Using Pattern Recognition 161
• Timing the Market Using the VIX 169
• Why a VIX Spike Stops a Market Sell-Off 179
• Starting the Business (on a Shoestring) 185
• Business Philosophy 191

Deep Value – Tobias Carlisle

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