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The Complete Guide to Option Strategies: Advanced and Basic Strategies on Stocks, ETFs, Indexes, and Stock Indexes

Book Description

Important insights into effective option strategies

In The Complete Guide to Option Strategies, top-performing commodity trading advisor Michael Mullaney explains how to successfully employ a variety of option strategies, from the most risky--selling naked puts and calls--to more conservative strategies using covered positions. The author covers everything from options on stocks, exchange-traded funds, stock indexes, and stock index futures to essential information on risk management, option "Greeks," and order placement. The book provides numerous tables and graphs to benefit beginning and experienced traders. Written by a CTA who has successfully employed various options strategies to generate market-beating returns, The Complete Guide to Option Strategies will be an important addition to any trader's library.

Michael D. Mullaney (Jacksonville, FL) is a high-ranking commodity trading advisor who specializes in option selling strategies.

Table of Contents

  1. Title Page
  2. Copyright Page
  3. Dedication
  4. Preface
    1. HOW TO USE THIS BOOK
    2. PREPARATION IS THE KEY
  5. Acknowledgements
  6. PART ONE - Learning the Fundamentals
    1. CHAPTER 1 - Getting Ready to Trade
      1. WHY TRADE OPTIONS?
      2. DEVELOPING A GAME PLAN
      3. WHAT IS AN OPTION?
      4. DEFINING KEY TERMS
      5. FINAL THOUGHTS
    2. CHAPTER 2 - Option Fundamentals
      1. OVERVIEW
      2. OPENING AND CLOSING POSITIONS
      3. OPTION BUYING
      4. OPTION SELLING
      5. SPREADS
      6. BID/ASK SPREAD
      7. OPTION CHAIN
      8. FINAL THOUGHTS
    3. CHAPTER 3 - What Determines an Option’s Price?
      1. OVERVIEW
      2. FACTORS AFFECTING OPTION PRICING
      3. FORECASTING OPTION PRICES
      4. FINAL THOUGHTS
    4. CHAPTER 4 - Tools of the Trade—Greeks
      1. OVERVIEW: GREEK BASICS
      2. POSITION GREEKS
      3. CONVERTING AN OPTION CHAIN TO GREEKS
      4. MORE ON DELTA
      5. FINAL THOUGHTS
    5. CHAPTER 5 - Buying versus Selling
      1. OVERVIEW
      2. COMPARING LONG AND SHORT OPTIONS
      3. OPTION BUYING
      4. OPTION SELLING
      5. BULLISH VERSUS BEARISH
      6. LEARNING HOW TO ROLL
      7. FINAL THOUGHTS
    6. CHAPTER 6 - Understanding Spread Terminology
      1. WHAT IS A SPREAD?
      2. SPREAD BUYING VERSUS SELLING
      3. SPREAD STRATEGY SUMMARY
      4. FINAL THOUGHTS
  7. PART TWO - The Four Basic Option Strategies
    1. CHAPTER 7 - Long Call
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    2. CHAPTER 8 - Long Put
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    3. CHAPTER 9 - Short Call
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    4. CHAPTER 10 - Short Put
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
  8. PART THREE - Spread Strategies
    1. CHAPTER 11 - Vertical Spread
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    2. CHAPTER 12 - Iron Condor
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    3. CHAPTER 13 - Unbalanced Spreads
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    4. CHAPTER 14 - Straddle and Strangle
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    5. CHAPTER 15 - Butterfly Spread
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    6. CHAPTER 16 - Condor Spread
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    7. CHAPTER 17 - Calendar Spread
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    8. CHAPTER 18 - Diagonal Spread
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    9. CHAPTER 19 - Covered Call
      1. OVERVIEW
      2. STRATEGY EXAMPLE
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    10. CHAPTER 20 - Combination
      1. OVERVIEW
      2. STRATEGY EXAMPLES
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    11. CHAPTER 21 - Collar
      1. OVERVIEW
      2. STRATEGY EXAMPLE
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
    12. CHAPTER 22 - Covered Combination
      1. OVERVIEW
      2. STRATEGY EXAMPLE
      3. BEYOND THE BASICS
      4. FINAL THOUGHTS
  9. PART FOUR - Comparing Underlying Instruments
    1. CHAPTER 23 - Comparing Stocks, ETFs, Indexes, and Stock Index Futures
      1. OVERVIEW
      2. SIZE OF INSTRUMENT
      3. EXERCISE AND ASSIGNMENT
      4. MARGIN
      5. COMMISSION AND BID/ASK
      6. TAXES
      7. FINAL THOUGHTS
    2. CHAPTER 24 - ETF Options
      1. OVERVIEW
      2. WHAT IS AN ETF?
      3. ETF OPTIONS
      4. FINAL THOUGHTS
    3. CHAPTER 25 - Stock Index Options
      1. OVERVIEW
      2. WHAT IS A STOCK INDEX?
      3. INDEX OPTIONS
      4. INDEX VOLATILITY SKEW
      5. INDEX TIME DECAY
      6. FINAL THOUGHTS
    4. CHAPTER 26 - Stock Index Futures Options
      1. OVERVIEW
      2. WHAT IS A FUTURES CONTRACT?
      3. STOCK INDEX FUTURES OPTION
      4. BONUS SECTION
      5. FINAL THOUGHTS
  10. PART FIVE - Advanced Topics
    1. CHAPTER 27 - Assessing Volatility
      1. OVERVIEW
      2. COMPARISON OF IMPLIED VOLATILITIES
      3. HOW TO COMPARE VOLATILITY
      4. RESPONSE TO CHANGING CONDITIONS
      5. MARKET VOLATILITY GAUGES
      6. VOLATILITY SKEW
      7. DELTA-NEUTRAL VOLATILITY TRADING
      8. CONSIDER TRADING VOLATILITY INDEX OPTIONS
      9. FINAL THOUGHTS
    2. CHAPTER 28 - Exercise and Assignment
      1. OVERVIEW
      2. AMERICAN-STYLE EXERCISE
      3. EUROPEAN-STYLE EXERCISE
      4. CASH SETTLEMENT
      5. AUTOMATIC EXERCISE
      6. SPREAD RISKS
      7. LIKELIHOOD OF EXERCISE
      8. ASSIGNMENT RISK
      9. EXERCISE AND ASSIGNMENT PROCEDURES
      10. FINAL THOUGHTS
    3. CHAPTER 29 - Risk Management
      1. RUN IT LIKE A BUSINESS
      2. CONTROLLING RISK
      3. FINAL THOUGHTS
    4. CHAPTER 30 - Margin
      1. OVERVIEW
      2. STOCK, ETF, INDEX, AND FUTURES MARGIN
      3. COMPARING MARGIN
      4. MARGIN PLANNING
      5. INTEREST
      6. CASH ACCOUNTS AND IRAs
      7. FINAL THOUGHTS
    5. CHAPTER 31 - Placing an Order
      1. OVERVIEW
      2. TYPES OF OPTION ORDERS
      3. STRATEGY: THE MULTISTEP ORDER
      4. BID/ASK SPREAD
      5. COMMISSIONS
      6. TRADING PLATFORM
      7. CLEARING OF TRADES
      8. FINAL THOUGHTS
    6. CHAPTER 32 - Taxation of Options
      1. GENERAL RULES
      2. OPTION TAXATION
      3. TAX REDUCTION FOR BROAD-BASED INDEX AND FUTURES OPTIONS
      4. INTERNAL REVENUE SERVICE CIRCULAR 230 NOTICE
      5. FINAL THOUGHTS
  11. APPENDIX A - Strategies at a Glance—ETFs
  12. APPENDIX B - Strategies at a Glance—Indexes
  13. APPENDIX C - Strategies at a Glance—Stock Index Futures
  14. Glossary
  15. About the Author
  16. Index