Equity and Index Options Explained

Index

actuaries 52

agricultural origin of options 19–20

American-style options

see also options

concepts 10–11, 16–17, 47–8

definition 10

intrinsic value 48

anonymity factors, trading 1, 13

answers see exercises and answers

arbitrage

concepts 31, 36, 38, 46–7

definition 31

put/call parity 36, 38

Aristotle 19

assignments

concepts 13–17

exercises and answers 14–17

‘at market’ prices 28

at-the-money options

concepts 38, 39–41, 49–50, 55–9, 61–70, 78–80, 82–5, 91–2, 96–104, 128–37, 164–5, 173–7, 206–8, 228–32

skew 59, 61–70

automatic exercise 16

Barings 236

bear call spreads see short call spreads

bear markets 22, 25, 57–8, 65, 100–4, 127–37, 139–46, 157–60, 161–5, 168–72, 173–7, 180–3, 205–8, 235–6

bear put spreads see long put spreads

Bear Sterns 153

‘being whipped’ 92, 226–32

bid/offer spreads, concepts 33–8, 112–13

Black, Fischer 20, 43, 44–5, 59

Black, Scholes and Merton option pricing models 20, 43, 44–5, 59

Bloomberg 56, 67–8, 82

bonds 9, 54

‘bottom fishing’ 221

BP 1, 2, 10, 11, 13–17, 46–7, 51–4, 80, 97–8, 117, 119–26, 127–37, 139–46, 148–9, 151–5, 161–4, 167–71, 173–7, 180–3, 187–91

Brent Crude 54

brokers 16–17, 81–2, 216–17, 233–4

delta 81–2, 216–17

information resources 233–4

quotes 216–17

two-way quotes 216–17

Buffett, Warren 236

bull call spreads see long call spreads

bull markets 22, 25–30, 57–8, 65, 95–104, 110–18, 119–26, 147–9, 151–5, 157–60, 161–5, 168–72, 173–7, 180–3, 195–9, 213–15, 221–2, 235–6

bull put spreads see short put spreads

butterflies, concepts 105