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

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

Hardback Wiley Trading

By (author) Jared Levy, Foreword by Mark Douglas

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  • Publisher: John Wiley & Sons Ltd
  • Format: Hardback | 404 pages
  • Dimensions: 157mm x 231mm x 38mm | 658g
  • Publication date: 27 April 2011
  • Publication City/Country: Chichester
  • ISBN 10: 0470603623
  • ISBN 13: 9780470603628
  • Edition statement: New.
  • Illustrations note: Illustrations
  • Sales rank: 475,541

Product description

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.

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Author information

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.

Back cover copy

Brings the complex world of options down to Earth for investors of every stripeFor 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 pointsDescribes market players, options pricing and valuation methods, and trading psychologyExplains the complex mathematics behind options pricing and trading strategies in a way that even math-phobic investors will find easy to digestDiscusses major trading strategies and helps you design an approach tailored to your personality, needs, and long- and short-term goalsDon'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

Flap copy

"With the techniques and strategies contained within these pages, you have everything you need to beat any hedge fund manager." --JARED LEVYOptions offer investors a relatively safe, inexpensive way to invest and hedge risk. Despite the rarefied jargon involved--such as "backwardation," "pin risk," and "volatility smile"--options trading is also much simpler than most people think--once you've mastered the basics. Enter Your Options Handbook--your complete, A-to-Z guide to understanding, entering, and succeeding in the options market. Options wunderkind Jared Levy patiently walks you through the market from a professional's perspective. He introduces you to the market mechanics and the players, explains how options are priced, and schools you in the essentials of trading psychology.His simple, plain-English explanations of everything from calls and puts to valuation and spreads significantly shorten the learning curve typically associated with options trading. And his step-by-step presentations, illustrated with helpful real-world examples, make major trading techniques and methodologies--as well as the complex mathematics informing them--easy to digest, even for the most math-averse reader.Your Options Handbook provides a framework for developing an approach to options trading tailored to your unique goals and personality. Levy helps you to identify what kind of trader you are, in terms of tolerance for risk, analytical versus intuitive thinking style, long- and short-term goals, budget, and other key factors. Then, in a series of chapters devoted to specific trading strategies, he helps you design an approach suited to your profile.

Table of contents

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