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Keene on the Market: Trade to Win Using Unusual Options Activity, Volatility, and Earnings

Book Description

A leading expert unveils his unique methodology for options trading

Options provide a high leverage approach to trading that can significantly limit the overall risk of a trade or provide additional income. Yet, many people fail to capitalize on this potentially lucrative opportunity because they mistakenly believe that options are risky. Now options expert Andrew Keene helps aspiring investors to enter this sector by explaining the principles of the options market and showing readers how to utilize calls and puts successfully.

  • Leading options expert Andrew Keene demystifies the basics of options trading

  • Debunks the myth that call purchases are synonymous with being bullish and that put purchases are bearish

  • Lays out in detail two distinct proprietary trading plans readers can follow

  • Explains how to trade using market maker techniques and tricks from the trading floor to help with his probabilities in options trading

Andrew Keene is best known for reading unusual options activity and seeing what others don't. Now he shares what he knows in a book that opens the opportunities of options trading to any investor.

Table of Contents

  1. Cover
  2. Half Title
  3. Series Page
  4. Title Page
  5. Copyright Page
  6. Preface
    1. Advice to New Traders
    2. Guaranteed Profitability?
  7. Acknowledgments
  8. Chapter 1: Introduction
    1. I Love to Trade
    2. From Young Clerk to Respected Market Maker
    3. Trading Career at the CBOE
    4. The AAPL King
    5. From Trading Pit Hotshot to Retail Trader
    6. The Live Trading Room: From Options 101 to Complex Strategies
  9. Chapter 2: The Life of a Professional Trader
    1. Perks of Being a Trader
    2. Not Quite as Glamorous as Everyone Thinks
    3. The Rollercoaster of Trading
    4. This Is Not Monopoly Money
    5. It Takes Money to Make Money
    6. The Setup
    7. Trading Expenses and Opportunity Cost
    8. Sticking to a Plan
  10. Chapter 3: Trading for a Living
    1. Trading for Amusement
    2. Enjoying Your Profits
    3. Moving from Amateur to Professional
    4. Moving from Simulated Account to Real Trading
    5. Moving from Simple to Complex Strategies
    6. Investing in Your Options Education
    7. Go Slow, Go Pro
    8. Defining Goals
  11. Chapter 4: Who the Players Are
    1. DPMs
    2. The Death of Market Makers
    3. Retail Traders
    4. Hedge Funds
    5. Institutional Traders
    6. Options Exchanges
  12. Chapter 5: Options Brokers and Platforms
    1. Full-Service Brokers and Options Trading
    2. Discount Brokerage Firms
    3. Researching Discount Brokers Firms
    4. Options Brokerage Firms' Fees
    5. Use of Margin
    6. Automatic Liquidation
  13. Chapter 6: Technical Trading
    1. Support and Resistance Levels
    2. What Is a Gap?
    3. Dow Theory
    4. Elliott Wave Theory
    5. Moving Averages
    6. Fifty-Day Moving Average
    7. Forty-Week Moving Average
    8. Magnets and Targets
    9. The Stochastic
    10. Other Charts, Technical Indicators, and Money Supply
    11. Japanese Candlestick Charts
    12. Disadvantages to Moving Averages
    13. The Ichimoku Cloud
    14. Summary
  14. Chapter 7: Reading the Market and Implied Volatility
    1. Make Money in Any Direction
    2. The Concept of Beta
    3. When to Be on the Sidelines
  15. Chapter 8: Options Basics Primer
    1. What Are Derivatives?
    2. What Are Calls and Puts?
    3. What Is an Underlying?
    4. Options: A Deeper Look
    5. Another Example in the GLD
    6. Options Premium
    7. Options Definitions
    8. Option Pricing: Complex Models
  16. Chapter 9: The Greeks
    1. Delta
    2. Gamma
    3. Theta
    4. Rho
    5. Vega
  17. Chapter 10: Call and Put Trading Strategies
    1. Long Calls
    2. Using Calls Bearishly
    3. Long Puts
    4. Using Puts Bullishly
    5. Selling Options
    6. Time Decay with Short Options
    7. Short Calls
    8. Short Puts
    9. Deeper Look at OTM Calls and Puts
    10. Is Risk versus Reward of the Option Trade Limited or Unlimited?
    11. Where Is Breakeven on an Option Trade?
  18. Chapter 11: Why Is Everyone Long Stock?
    1. The American Dream
    2. I Have Insurance on Almost Everything
    3. The Famous Covered Call
    4. The Zero-Cost Collar
    5. Summary
  19. Chapter 12: What Are Synthetic Options Positions?
    1. Synthetic Long Stocks
    2. Synthetic Long Stock = Long Call + Short Put
    3. Synthetic Short Stock = Short Call + Long Put
    4. The Goal of Making Synthetics
    5. Synthetic Long Call = Long Stock + Long Put – Strike Price
    6. Synthetic Short Call = Short Stock + Short Put – Strike Price
    7. Synthetic Long Put = Long Call + Strike Price – Short Stock Price
    8. Synthetic Short Put = Short Call + Strike Price – Long Stock Price
  20. Chapter 13: What Is Volatility and How Does It Affect Options?
    1. Basics of Volatility and Options Trading
    2. Historical Volatility
    3. Implied Volatility
    4. Volatility Is a Trader's Best Friend
    5. CBOE'S VIX Index
    6. CBOE's VIX: More Than a Fear Indicator
    7. Contango versus Backwardation
  21. Chapter 14: Various Uses of Options and Why I Love to Trade Them
    1. Leverage
    2. Flexibility
    3. Risk Control
    4. Trader's Edge
    5. Hedge versus Speculation
    6. Complex Options Strategies
    7. “If Only I Had Bought Those Calls!”
    8. When in Doubt, Hands Out
    9. What It Takes to Make a Bigger Trade
  22. Chapter 15: More Complex Options Strategies
    1. Long Straddles and Strangles
    2. Short Straddles and Strangles: Beware Blowout Risk!
    3. Butterflies and Condors
  23. Chapter 16: Managing Trades on Expiration
    1. Long Call—Long the FB November 23 Calls
    2. Short Call—Short the AAPL November 500 Calls
    3. Long Put—Long the MSFT November 27 Puts
    4. Short Put—Short the GOOG November 650 Puts
    5. More Complex Trades
    6. Long Call Spread—Long the FB November 23-25 Call Spread
    7. Short Call Spread—Short the AAPL November 500-520 Call Spread
    8. Long Put Spread—Long the MSFT November 27-25 Put Spread
    9. Short Put Spread—Short the GOOG November 650-630 Put Spread
    10. Long Straddle—Long the FB Nov 23 Straddle
    11. Short Straddle—Short the MSFT November 27 Straddle
    12. Long Strangle—Long the AAPL November 480-500 Strangle
    13. Short Strangle—Sell the GOOG November 650-670 Strangle
    14. Short Iron Condor—Selling the FB November 23-21 Put Spread and Selling the FB November 25-27 Call Spread
    15. Short Condor—Short the MSFT November 27 Straddle and Long the 25 Put–29 Call Strangle
    16. Long Call Butterfly—Long the FB November 23-25-27 Call Fly
    17. Long Put Butterfly—Long the MSFT November 27-25-23 Put Fly
  24. Chapter 17: Andrew Keene's Non-Blowout Trading Plan
    1. Trading Pepsi Back in the Day
    2. Now That I'm Upstairs . . .
    3. Limiting Your Exposure to a Percentage of Your Total Book
    4. Andrew Keene's Confidence Scale: Ranking Every Trade from 1 to 5
    5. Every Trade Is a Percentage of My Book
    6. Andrew Keene's Non-Blowout Trading Plan
  25. Chapter 18: Andrew Keene's OCRRBTT Trading Plan
    1. Story of the OCRRBTT Trading Plan
    2. Reading Options Paper
    3. What Call and Put Volume Means to a Trader
    4. How Insiders Read Paper
    5. Using the OCRRBTT Trading Plan
    6. Conclusion
  26. Chapter 19: Trading Earnings (HIMCRIBBIT)
    1. HIM: Historical, Implied, Measured
    2. Which Type of Option?
    3. C: Chart
    4. RRBTT: Risk versus Reward, Breakeven, Time, and Target
    5. Calendars and Advanced Topics
    6. Trading for a Living
    7. Confidence Scale
    8. Tricks and Tips
  27. Conclusion
  28. Answers to End-of-Chapter Questions
  29. About the Author
  30. Index