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Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks

by

Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks Cover

 

Synopses & Reviews

Publisher Comments:

For years, Options for the Beginner and Beyond has been a best-selling guide to trading.

 

This second edition is updated to reflect today’s use  of weekly options in basic and advanced trading strategies, new examples, and a revised end-of-year tax strategy.  You’ll find up-to-the-minute coverage of all the basics—selecting brokers, planning trades, and the pros and cons of each option strategy. You’ll even learn advanced techniques for reducing risk and capturing arbitrage profits!

 

EVERYTHING you need to profit from options, hands-on!

 

     ALL the core knowledge:

     •    Selecting Options

     •    Entering and Exiting Trades

     •    The Greeks

     •    Risk Graphs

     •    LEAPS

     •    Weekly Options

     •    Choosing a Broker

     •    Avoiding Key Mistakes

 

     ALL the winning strategies:

     •    Vertical and Horizontal Spreads

     •    Covered Calls

     •    Straddles and Strangles

     •    Stock Repair and Enhancement

     •    Married Puts

     •    Collars

     •    Naked Options

     •    Stock Substitutes

     •    Backspreads

     •    Butterflies

     •    Iron Condors

     •    Double Diagonals

     •    End-of-Year Tax Strategies

     •    Advanced Day Trading Techniques

     •    And more!

 

Today’s #1 Options Trading Guide:  Now Updated and Expanded.

 

“This book presents practical advice on placing real-world trades that I haven’t seen in any other book on options. The chapter on entering and exiting trades alone could make or save you tens of thousands of dollars over your investing career.”

John Reese, founder and CEO,  Validea.com and Validea Capital Management

 

“Hands down, the best book currently available on option trading for beginners. Olmstead details practical option strategies clearly and concisely—the book is  a must for any serious options trader.”

Mitch Zacks, author, Ahead of the Market

 

“Clearly written by someone who does as well as teaches, Options for the  Beginner and Beyond is aptly named. This book is easy to read and is also full of gems that will appeal to all levels of trader. Remarkably succinct, Ed Olmstead takes you on a fast-paced journey, avoiding any fluff and getting straight to the point. Great for dipping into and great for reading all the way through.”

Guy Cohen, author, Options Made Easy and The Bible of Options Strategies;  creator of OptionEasy (www.optioneasy.com)

 

• Short, simple, hands-on lessons: build your mastery one step at a time!

• Move from the absolute basics to advanced strategies covered in no other beginner’s guide

• Indispensable new information about trading weekly options and updated year-end tax strategy

Synopsis:

Master option trading strategies one step at a time! Options for the Beginner and Beyond, Second Edition teaches options through brief, carefully-paced lessons on option concepts and trading strategies, crystal-clear definitions, and plenty of real trading examples. Every lesson builds on the one preceding it, explaining options in plain English, and guiding you all the way to advanced strategies covered in no other introductory tutorial. Drawing on his extensive experience teaching options trading to beginners — and five years editing a leading options newsletter — W. Edward Olmstead shows how to systematically control your risk, protect your investments, and maximize your profits. This new Second Edition integrates new coverage of weekly options throughout, and presents updated tax strategies every options trader needs to know. Olmstead shows you how to do all this, and much more:

  • Select options with high profit potential
  • Enter and exit trades
  • Choose brokers
  • Work with the Greeks, risk graphs, and LEAPs
  • Use vertical, event producing, and calendar spreads
  • Trade covered calls, straddles, strangles, married puts, and collars
  • Master these and other sophisticated strategies: naked options, stock substitutes, backspreads, butteryfly spreads, iron condors, and double diagonals
  • Implement effective end-of-year tax strategies
  • Day trade indexes with options
  • Use delta-neutral trading
  • Leverage the theory of maximum pain; implied volatility, and Black-Scholes

About the Author

W. Edward Olmstead has a B.S. from Rice University and a Ph.D from Northwestern University, where he is currently Professor of Applied Mathematics in the McCormick School of Engineering and Applied Sciences. He has received several prestigious awards for teaching excellence including an endowed chair. His teaching activities include courses that cover both the theory of options pricing and practical strategies for trading options.

In the world of finance, Dr. Olmstead has more than fifteen years of experience in the trading of options. He holds a FINRA Series 65 license along with considerable experience as an options consultant. He has written various articles on options for the online media.

Dr. Olmstead was Editor of The Options Professor newsletter published by Independent Investor, Inc. during 2003-07. His consulting activities included service as an options analyst for Spear Capital Management. He also worked on an ultra short-term trading concept for a member firm of the Chicago Mercantile Exchange. Since 2010, he has utilized a proprietary options strategy in the management of funds for a group of private clients.

For more information about Dr. Olmstead’s current options interests, go to www.olmsteadoptions.com.

Table of Contents

Contents

Acknowledgments     xii

About the Author     xiii

Preface     xiv

Section I Basic Concepts     1

Chapter 1 Introduction     3

Why Options?     3

The Basic Concept of Options     4

Major Differences Between Stocks and Options     4

A Detailed Explanation of Options     7

Comments     15

Chapter 2 Option Selection     17

What Is a Cheap Option?     17

Selecting a Call     20

Overall Evaluation     24

Selecting a Put     24

Chapter 3 Entering and Exiting Option Trades     25

Entering a Trade     27

Exiting a Trade     28

Chapter 4 The Greeks     31

Delta     31

Theta     35

Gamma     36

Vega     37

Rho     38

Chapter 5 Risk Graphs     39

Single Option Trade     40

Multiple Option Trade     42

Comments     44

Chapter 6 LEAPS and Weekly Options    45

LEAPS     46

Weekly Options     50

Chapter 7 Assignment Anxiety     53

Comments     55

Applications     56

Chapter 8 Broker Selection     59

Types of Brokers     59

Commissions     60

Trading Platform     61

Margin and Trading Limitations     62

Level 3 Trading     63

Live Broker Assistance     63

Comments     64

Chapter 9 Miscellaneous Tips     65

Time Is Money     65

Trading with the Trend     66

Risk Capital for Options Trading     66

Tracking Trades     67

Anticipating Events     68

Real-Time Quotes     68

Market Orders with Options     69

Options Calculator     69

Section II Trading Strategies     71

Chapter 10 Vertical Spreads     73

Debit Vertical Spreads     74

Credit Vertical Spreads     77

Comments     80

Vertical Spreads with Weekly Options     80

Chapter 11* Event-Producing Credit Spreads     81

Comments     87

Chapter 12 Calendar Spreads     89

The Rollout Maneuver     93

Comments     94

Calendar Spreads with Weekly Options     95

Chapter 13* Advanced Calendar Spreads     97

Volatility Skew Trades     97

Ratio Calendar Spread Trades     101

Deep-in-the-Money LEAPS Put Calendar Spreads     103

Diagonal Calendar Spread Trades     106

Chapter 14 Covered Calls     111

An Idealized Trade     112

A Realistic Trade     112

Covered Call Versus Naked Put     114

Comments     117

Covered Calls with Weekly Options     118

Chapter 15 Straddles and Strangles     121

The Straddle Trade     121

The Strangle Trade     127

Straddles and Strangles with Weekly Options     128

Chapter 16 Stock Repair and Stock Enhancement     131

Stock Repair Strategy     132

Stock Enhancement Strategy     135

Chapter 17 Married Puts     139

Comments     143

Married Puts with Weekly Options     143

Chapter 18 Collars     145

Comments     152

Chapter 19* Advanced Collars     155

Comments     162

Chapter 20 Naked Option Writing     163

The Risk of Naked Option Writing     164

Acquiring Stock with Naked Puts     168

Comment     169

Chapter 21 Stock Substitutes     171

Matching the Stock Delta     171

Synthetic Long Stock     171

Deep-in-the-Money Put     174

Deep-in-the-Money Call     176

Chapter 22 Backspreads     179

Comments     185

Backspreads with Weekly Options     185

Chapter 23 Butterfly Spreads     189

Standard Butterfly Trade     189

Butterfly Trade with Adjustments     192

Unbalanced Strikes Butterfly Trade     195

Unbalanced Contracts Butterfly Trade     197

Chapter 24 Iron Condors and Double Diagonals     201

The Iron Condor Trade     201

The Double Diagonal Trade     204

Comments     206

Iron Condors and Double Diagonals with Weekly Options     207

Chapter 25 An End-of-Year Tax Strategy     209

Tax Code Restrictions     209

Qualified Covered Calls     210

Basic Strategy     211

Follow-Up Variations     214

Comments     215

Section III Special Topics     217

Chapter 26* Day Trading an Index with Options     219

Comments     222

Chapter 27* Delta-Neutral Trading     223

Review of the Delta Concept     223

A Delta-Neutral Portfolio     225

Delta-Neutral Trading for a Profit     227

Chapter 28* Theory of Maximum Pain     229

Chapter 29* Implied Volatility and the Black-Scholes Formula     233

Historical Background    233

Implied Volatility     236

Applications of Implied Volatility     237

Comments     237

Chapter 30* The Put-Call Parity Relationship     239

Calls Cost More Than Puts     239

Applications of Put-Call Parity     242

Index    243

Product Details

ISBN:
9780132655682
Author:
Olmstead, W. Edward
Publisher:
FT Press
Author:
Olmstead, W.
Subject:
Investments & Securities
Subject:
Business, Investing
Copyright:
Publication Date:
20121220
Binding:
HARDCOVER
Language:
English
Pages:
272
Dimensions:
9.3 x 6.3 x 0.944 in 460 gr

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Related Subjects

Business » Investing
Business » Investing » Options
Computers and Internet » Networking » General
Engineering » Engineering » General Engineering

Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks New Hardcover
0 stars - 0 reviews
$29.99 In Stock
Product details 272 pages FT Press - English 9780132655682 Reviews:
"Synopsis" by ,

Master option trading strategies one step at a time! Options for the Beginner and Beyond, Second Edition teaches options through brief, carefully-paced lessons on option concepts and trading strategies, crystal-clear definitions, and plenty of real trading examples. Every lesson builds on the one preceding it, explaining options in plain English, and guiding you all the way to advanced strategies covered in no other introductory tutorial. Drawing on his extensive experience teaching options trading to beginners — and five years editing a leading options newsletter — W. Edward Olmstead shows how to systematically control your risk, protect your investments, and maximize your profits. This new Second Edition integrates new coverage of weekly options throughout, and presents updated tax strategies every options trader needs to know. Olmstead shows you how to do all this, and much more:

  • Select options with high profit potential
  • Enter and exit trades
  • Choose brokers
  • Work with the Greeks, risk graphs, and LEAPs
  • Use vertical, event producing, and calendar spreads
  • Trade covered calls, straddles, strangles, married puts, and collars
  • Master these and other sophisticated strategies: naked options, stock substitutes, backspreads, butteryfly spreads, iron condors, and double diagonals
  • Implement effective end-of-year tax strategies
  • Day trade indexes with options
  • Use delta-neutral trading
  • Leverage the theory of maximum pain; implied volatility, and Black-Scholes

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