Introduction.
CHAPTER 1: The Language of Options.
The Basics.
Listed Options.
Nomenclature.
Longs and Shorts.
A Bit More Terminology.
Offsetting Option Trades.
Expiration, Exercise, and Assignment.
American versus European.
Quotations.
The Special Properties of Options.
Time.
Volatility.
How Options Respond to Changing Conditions.
The Greeks.
The Role of the Market Maker.
Volume and Open Interest.
CHAPTER 2: Option Strategies.
Long Call.
Short Covered Call.
Short Naked Call.
Long Call with Short Stock.
Long Put.
Short Covered Put.
Short Naked Put.
Long Put with Long Stock.
Equivalent Strategies.
Combinational Strategies.
CHAPTER 3: Volatility.
Volatility Trading—Buying and Selling Volatility.
Tools of the V-Trade.
Selling High Volatility.
Buying Low Volatility.
Delta-Neutral Trading—In a Nutshell.
Seasonal Patterns in the Grains.
Other Commodities.
Volatility Skew—What Is It and How Can I Use It?
Some Words of Warning about Naked Writing.
The Relationship between Volatility and Price.
CHAPTER 4: The Option Trader’s Arsenal.
Buying Nearby Options—The Swing Trader’s Perfect Tool.
Debit Spreads—The Calm Approach.
Strategies for Trending Markets.
The Horizontal Spread—A Good Strategy in a Sideways Market.
Credit Spreads—Say “Don’t Go There”.
Condors—Two-Winged Creatures.
The Backspread—A Directional Strategy that Costs Nothing If You Are Wrong.
Covered Writing—Enhancing Your Returns.
LEAPS—An Alternative to Stock.
The Synthetic—Another Alternative to Stock.
The Butterfly Spread—When You Have a Narrow Target Range.
Using the Right Option Strategy.
CHAPTER 5: Special Situations.
Playing Takeovers.
Letting the Options Market Tip You Off on Takeovers.
Covered Writing with Convertible Securities.
Investing in a Rough Market.
CHAPTER 6: Theoretical and Practical Matters.
Options Pricing Models.
Coming Up with the Right Volatility.
Volatility Skew.
What Causes Volatility Skew?
Balancing Factors.
Put/Call Parity.
The Greeks Revisited.
True Delta and Gamma.
Understanding the Limitations of Your Model.
Dealing with Anomalies and Pricing Difficulties.
CHAPTER 7: Tips for Beginners.
The Psychological Battle.
Trading Mistakes and What I Learned.
Some Thoughts on How Trading Fits In with Real Life.
CHAPTER 8: Encore.
Directional Trading Using Pattern Recognition.
Timing the Market Using the VIX.
Why a VIX Spike Stops a Market Sell-Off.
Starting the Business (on a Shoestring).
Business Philosophy.
Glossary.
Index.
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