You are previewing Options Made Easy: Your Guide to Profitable Trading, Third Edition.
O'Reilly logo
Options Made Easy: Your Guide to Profitable Trading, Third Edition

Book Description

Master option trading, visually, hands-on -- and discover the powerful, easy-to-use OVI indicator that leads the market, revealing what the world's savviest option traders are doing right now! Learn option trading from the newest edition of Guy Cohen's international best-seller Options Made Easy, which has earned a worldwide reputation for its simplicity, clarity and hands-on practicality. With outstanding graphics for step-by-step learning, this easy tutorial packed with real trades is designed to reinforce every new trader's learning experience.

Using plain English and clear illustrations to explain each key trading strategy, Cohen avoids complex math while effortlessly delivering the practical knowledge traders need. Now, in this eagerly-anticipated Third Edition, Cohen updates all examples and data, utilizing the market's new option symbols throughout, and presenting a more streamlined, focused, and up-to-date review of relevant chart patterns and technical analyses. Most important, he thoroughly introduces his breakthrough OVI indicator, revealing how it captures the implications of actual option transaction data, and presents signals even beginners can use to earn consistent profits. Step by step, Cohen walks traders through:

  • Filtering for stocks and selecting the right strategy for each situation

  • Implementing proven strategies for income, including covered calls and bull put spreads

  • Trading volatility through straddles and strangles

  • Using butterflies and condors to trade rangebound markets

  • Understanding trading psychology and its impact on option trades

  • And much more

  • Table of Contents

    1. Title Page
    2. Copyright Page
    3. Praise for Options Made Easy
    4. Dedication Page
    5. Contents
    6. Acknowledgments
    7. About the Author
    8. Executive Summary
    9. Preface
    10. Chapter 1. Introduction to Options
      1. Criteria for Successful Investing
      2. Risk Profile Charts
      3. The Definition of an Option
      4. The Valuation of Options
      5. Intrinsic and Time Value for Calls
      6. Intrinsic and Time Value for Puts
      7. The Seven Factors that Influence an Option’s Premium
      8. Risk Profile Charts for Call Options
      9. Risk Profile Charts for Put Options
      10. Memory Tips for Long and Short Calls and Puts
      11. Basic Risk Profiles Summary
      12. Notation Standard for the Examples
      13. Chapter 1 Major Learning Points
    11. Chapter 2. Into the Marketplace
      1. How to Read Option Prices
      2. Options Contracts
      3. Option Exchanges
      4. Option Expiration Dates
      5. Strike Prices
      6. Option Ticker Symbols
      7. Margin
      8. Placing Your Trade
      9. Types of Order in the Market
      10. Time Limits with Trade Orders
      11. Always Have a STOP in Mind Whenever You Make a Trade
      12. Trading Tips
      13. Leverage and Gearing
      14. A Brief Introduction to Delta (Hedge Ratio)
      15. Chapter 2 Major Learning Points
    12. Chapter 3. The Basics of Fundamental Analysis
      1. Past History and Management
      2. News and Results
      3. Sentiment and Expectations
      4. The Wider Economy
      5. Economic Indicators to Watch (U.S. Only)
      6. Bonds
      7. Supply and Demand
      8. Corporate Fundamentals
      9. Key Financial Terms
      10. Key Financial Figures and Ratios
      11. Search Criteria and Screening Filters for Fundamentals
      12. Common Sense and Being Alert
      13. Chapter 3 Major Learning Points
    13. Chapter 4. The Basics of Technical Analysis
      1. Three Ways to View Price Patterns
      2. Support and Resistance
      3. Double and Triple Tops and Bottoms
      4. Head and Shoulders
      5. Reverse Head and Shoulders
      6. Consolidation Patterns
      7. Fibonacci Retracements
      8. Elliott Wave
      9. Gann Levels
      10. Gaps
      11. Volume
      12. Technical Indicators
      13. Moving Averages
      14. Moving Average Convergence Divergence (MACD)
      15. Stochastics
      16. The Relative Strength Index (RSI)
      17. Different Time Frames
      18. More Technical Analysis Terminology
      19. The OVI
      20. Chapter 4 Major Learning Points
    14. Chapter 5. Two Popular Strategies and How to Improve Them
      1. The Synthetic Call (Protective Put)
      2. The Covered Call (Covered Write or Buy Write)
      3. The Collar (or Protected Buy-Write)
      4. Chapter 5 Major Learning Points
    15. Chapter 6. An Introduction to the Greeks
      1. The Greeks
      2. Delta Δ
      3. Gamma Γ
      4. Theta θ
      5. Vega K (Also Known as Kappa or Lambda)
      6. Rho ρ
      7. Chapter 6 Major Learning Points
    16. Chapter 7. Bull Call Spreads and Bull Put Spreads
      1. Bull Call Spreads
      2. Bull Put Spreads
      3. Advantages of Spread—A Summary
      4. Chapter 7 Major Learning Points
    17. Chapter 8. Two Basic Volatility Strategies
      1. Straddles
      2. Strangles
      3. Chapter 8 Major Learning Points
    18. Chapter 9. Two Basic Sideways Strategies
      1. Butterflies
      2. Condors
      3. Comparison Between the Butterfly and the Condor
      4. Chapter 9 Major Learning Points
    19. Chapter 10. Trading and Investing Psychology
      1. Myths and Realities
      2. Tips and Good Habits
      3. Your Optimal Mindset
      4. Money Management and Rule Making
      5. Chapter 10 Major Learning Points
    20. Chapter 11. Putting It All Together—A Call to Action
      1. Step 1—Choose Your Chart Pattern and Strategy
      2. Step 2—Set Your Plan
      3. Step 3—Execute the Plan
      4. Chapter 11 Major Learning Points
    21. Chapter 12. Trading with the OVI
      1. What Is the OVI?
      2. The Ultimate OVI Setup
      3. The Trading Plan
      4. Summary of Outcomes
      5. Chapter 12 Major Learning Points
    22. Appendix I. Strategy Table
    23. Appendix II. Glossary
    24. References and Recommended Reading
    25. Index