You are previewing Learn How to Trade Options (Collection).
O'Reilly logo
Learn How to Trade Options (Collection)

Book Description

A brand new collection of powerful insights into successful option trading… 2 pioneering books, now in a convenient e-format, at a great price!

2 remarkable books help you earn consistent option profits as you tightly control risk!

Options offer immense potential both for high profits and more effective risk management. Now, in this 2-book collection, two of the world’s most effective option traders identify the skills and techniques you need to earn consistent profits in these challenging, high-opportunity markets. In Options for the Beginner and Beyond, Second Edition, Dr. W. Edward Olmstead teaches options through brief, carefully-paced lessons on option concepts and trading strategies, crystal-clear definitions, and plenty of real trades. Every lesson builds on its predecessor, explaining options in plain English, and guiding you all the way to advanced strategies covered in no other introductory tutorial. Drawing on extensive experience teaching options and editing a leading options newsletter, Olmstead shows how to systematically maximize profits and protect capital. From choosing brokers to working with “the Greeks” and Black-Scholes, it’s all here. This new Second Edition integrates new coverage of weekly options, and presents updated tax strategies you simply must know. Then, in Think Like an Option Trader, Michael Benklifa reveals the secret of success in option trading: thinking like a professionaloption trader, not a stock trader. You’ll learn how to get rid of the massively counterproductive habits you learned in stock trading, and understand the radically different dynamics of option markets. Then, using practical, simple examples, Benklifa helps you master trade selection, risk management, and much more. Leveraging realistic, up-to-date knowledge of how option markets really work, you can consistently build trades that earn profits, limit risk, even structure trades for a 90% probability of success!

From option trading expertsDr. W. Edward Olmstead and Michael Benklifa

Table of Contents

  1. About This eBook
  2. Title Page
  3. Copyright Page
  4. Table of Contents
  5. Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks, Second Edition
    1. Copyright Page
    2. Dedication Page
    3. Acknowledgments
    4. About the Author
    5. Preface
    6. Section I: Basic Concepts
      1. 1. Introduction
        1. Why Options?
        2. The Basic Concept of Options
        3. Major Differences Between Stocks and Options
          1. Leverage
          2. Time Limitation
          3. Price Movement
          4. Financial Risk
        4. A Detailed Explanation of Options
          1. The Option Contract
          2. The Call Option
            1. Buying a Call Option
            2. Selling a Call Option
          3. The Put Option
            1. Buying a Put Option
            2. Selling a Put Option
        5. Comments
      2. 2. Option Selection
        1. What Is a Cheap Option?
        2. Selecting a Call
        3. Overall Evaluation
        4. Selecting a Put
      3. 3. Entering and Exiting Option Trades
        1. Entering a Trade
        2. Exiting a Trade
      4. 4. The Greeks
        1. Delta
          1. Computing the Delta of a Call Option
          2. Application of the Delta
          3. Computing the Delta of a Put Option
        2. Theta
        3. Gamma
        4. Vega
        5. Rho
      5. 5. Risk Graphs
        1. Single Option Trade
        2. Multiple Option Trade
        3. Comments
      6. 6. LEAPS and Weekly Options
        1. LEAPS
          1. Dividends
        2. Weekly Options
      7. 7. Assignment Anxiety
        1. Comments
        2. Applications
      8. 8. Broker Selection
        1. Types of Brokers
        2. Commissions
        3. Trading Platform
        4. Margin and Trading Limitations
        5. Level 3 Trading
        6. Live Broker Assistance
        7. Comments
      9. 9. Miscellaneous Tips
        1. Time Is Money
        2. Trading with the Trend
        3. Risk Capital for Options Trading
        4. Tracking Trades
        5. Anticipating Events
        6. Real-Time Quotes
        7. Market Orders with Options
        8. Options Calculator
    7. Section II: Trading Strategies
      1. 10. Vertical Spreads
        1. Debit Vertical Spreads
          1. Bull Call Spread
          2. Bear Put Spread
          3. Comments
        2. Credit Vertical Spreads
          1. Bull Put Spread
          2. Bear Call Spread
        3. Comments
        4. Vertical Spreads with Weekly Options
      2. 11*. Event-Producing Credit Spreads
        1. Comments
      3. 12. Calendar Spreads
        1. The Rollout Maneuver
        2. Comments
        3. Calendar Spreads with Weekly Options
      4. 13*. Advanced Calendar Spreads
        1. Volatility Skew Trades
          1. Comments
        2. Ratio Calendar Spread Trades
          1. Comments
        3. Deep-in-the-Money LEAPS Put Calendar Spreads
        4. Diagonal Calendar Spread Trades
          1. Credit Diagonal Spread
          2. Debit Diagonal Spread
      5. 14. Covered Calls
        1. An Idealized Trade
        2. A Realistic Trade
        3. Covered Call Versus Naked Put
        4. Comments
        5. Covered Calls with Weekly Options
      6. 15. Straddles and Strangles
        1. The Straddle Trade
          1. Comments
        2. The Strangle Trade
        3. Straddles and Strangles with Weekly Options
      7. 16. Stock Repair and Stock Enhancement
        1. Stock Repair Strategy
          1. Comment
        2. Stock Enhancement Strategy
      8. 17. Married Puts
        1. Comments
        2. Married Puts with Weekly Options
      9. 18. Collars
        1. Comments
      10. 19*. Advanced Collars
        1. Comments
      11. 20. Naked Option Writing
        1. The Risk of Naked Option Writing
        2. Acquiring Stock with Naked Puts
        3. Comment
      12. 21. Stock Substitutes
        1. Matching the Stock Delta
        2. Synthetic Long Stock
          1. Comments
        3. Deep-in-the-Money Put
        4. Deep-in-the-Money Call
      13. 22. Backspreads
        1. Comments
        2. Backspreads with Weekly Options
      14. 23. Butterfly Spreads
        1. Standard Butterfly Trade
          1. Comments
        2. Butterfly Trade with Adjustments
          1. Comment
        3. Unbalanced Strikes Butterfly Trade
        4. Unbalanced Contracts Butterfly Trade
      15. 24. Iron Condors and Double Diagonals
        1. The Iron Condor Trade
        2. The Double Diagonal Trade
        3. Comments
        4. Iron Condors and Double Diagonals with Weekly Options
      16. 25. An End-of-Year Tax Strategy
        1. Tax Code Restrictions
        2. Qualified Covered Calls
        3. Basic Strategy
        4. Follow-Up Variations
        5. Comments
    8. Section III: Special Topics
      1. 26*. Day Trading an Index with Options
        1. Comments
      2. 27*. Delta-Neutral Trading
        1. Review of the Delta Concept
        2. A Delta-Neutral Portfolio
        3. Delta-Neutral Trading for a Profit
      3. 28*. Theory of Maximum Pain
      4. 29*. Implied Volatility and the Black-Scholes Formula
        1. Historical Background
          1. Derivation of the Black-Scholes Formula
          2. Application of the Black-Scholes Formula
        2. Implied Volatility
        3. Applications of Implied Volatility
        4. Comments
      5. 30*. The Put-Call Parity Relationship
        1. Calls Cost More Than Puts
        2. Applications of Put-Call Parity
    9. Index
    10. FT Press
  6. Think Like an Option Trader: How to Profit by Moving from Stocks to Options
    1. Copyright Page
    2. Dedication Page
    3. Acknowledgments
    4. About the Author
    5. Preface
      1. The Myth of Sisyphus
    6. Introduction: Why Traders Fail
      1. Is Failure a Flaw?
      2. Blaming Emotions
      3. Blaming Systems
      4. Successful Traders Versus Successful Trading
      5. Trading for a Living
      6. Trade for the Right Reasons
      7. The Ability to Duplicate a Strategy
      8. Correlation Versus Causation
      9. Don’t Trade to Make Money
      10. Leverage
      11. What Kind of Trader Are You?
      12. A Single Difference Goes a Long Way
      13. A Limited Worldview
    7. 1. Understanding Options
      1. What Is a Stock?
      2. What Is an Option?
      3. The Bet You Wouldn’t Make
      4. The Options Trader’s Toolbox
    8. 2. What Is Price?
      1. How a Stock Trader Looks at Stock Price
      2. How Options Traders Look at Stock Price
      3. How an Options Trader Looks at an Option’s Price
    9. 3. Pure Options Trading: Building Your Own Trade
      1. Basic Greek Concepts
      2. Build 1: Making a Directionless Trade
      3. Build 2: Reducing Your Risk
      4. Build 3: Augmented Returns
      5. Bending the Curve
      6. The Options Trader’s Toolbox: Synthetic Straddles
      7. Evolving a Trade
      8. In-, At-, and Out-of-the-Money Trades
    10. 4. Situational Trading
      1. Known Knowns
      2. Analyzing Situations
      3. Building a Directional Trade
      4. Known Unknowns
      5. Unknown Unknowns
    11. 5. Risk Management
      1. Responsibility in Trading
      2. Strategy Is Risk Management
      3. How a Stock Trader Measures Risk
      4. Defined Risk for Options Traders
      5. Layering and Unlayering Trades
      6. Trades Cannot Be Fixed, Just Replaced
      7. Portfolio Risk
      8. Concluding Remarks
    12. Appendix: Quantum Physics and Trading—The Price Uncertainty Principle
    13. Index
    14. FT Press