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Your Options Handbook: The Practical Reference and Strategy Guide to Trading Options

Jared Levy, Mark Douglas (Foreword by)
ISBN: 978-0-470-60362-8
404 pages
April 2011
Your Options Handbook: The Practical Reference and Strategy Guide to Trading Options (0470603623) cover image
A comprehensive yet simplified guide to the complex world of options investing and risk management

Before trading derivatives, one needs to understand the secrets and mechanics behind the options market. Your Options Handbook: The Practical Reference and Strategy Guide to Trading Options offers a straightforward, practical explanation of the options marketplace, including its origins, the mechanics of the market, and how to profit from trading options.

  • Walks you through the stock and option markets from a professional's perspective, but uses plain language and simple analogies
  • Discusses different trading strategies based upon whether one's opinion of the market is bullish, bearish, or neutral
  • Details market players, useful tips, and trading psychology, and explains how options are priced

Options are a versatile trading instrument that typically cost less and can have lower risk than stocks. They also offer investors a unique edge and lucrative opportunities that are not available to stock only traders. Your Options Handbook helps investors fully understand the options market, allowing them to enter the sector with greater ease.

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Foreword.

Preface.

Acknowledgments.

Chapter 1 Market Basics and Market Mechanics: What is Going on and How Does it all Work?

The Markets.

Sectors and Industries.

ETFs—A Different Kind of Investment.

Final Thoughts.

Chapter 2 Data That Moves the Markets: The First Step in Your Analysis.

Data and Sentiment.

Economists, Predictions, and Indicators.

Economic Indicators.

Key Indicators to Watch.

Final Thoughts.

Chapter 3 Fundamental and Technical Stock Analysis and Tools: The Second Step in your Analysis.

Introduction to Fundamental Analysis.

Digesting the News.

Cheap versus Value.

Mergers and Acquisitions for the Everyday Options Trader.

The Wisdom (or Lack Thereof) of Crowds.

Trading Tactics and Technical Analysis.

Plans of Attack.

New Trader Tips.

Top 10 Things Professionals Do, That the Average Retail Trader Doesn't.

Final Thoughts.

Chapter 4 Options Basics:  Techniques and Fundamentals to Master Before Applying any Options Strategy.

The Oracle of Omaha Did it, Why Can’t I?

The Basics.

Trading Options—Order Types.

Options Expiration in Detail.

Exercise and Assignment.

When Should You Exercise an Option Early?

What is Triple Witching? (Or Quadruple Witching).

Final Thoughts.

Chapter 5 The Greeks: The Forces That Influence Options' Prices.

Delta.

Final Thoughts.

Chapter 6 Strategy – The Basic Option Trades.

Basic Single Options Strategies.

The Long Call.

Covered Call ( Buy-Write).

Buy-Write versus Covered Call.

Long Put.

Basic Stock and Option Spread.

Final Thoughts.

Chapter 7 Strategy – The Basic Spread Trades.

Verticals Spreads in Depth.

The Four Basic Vertical Spreads – Basic Characteristics and Behavior.

Credit Spreads versus Debit Spreads.

Credit Vertical Spreads.

Debit Vertical Spreads.

Buying a Put Spread (Bear Put Spread).

Buying a Call Spread (Bull Call Spread).

Market Direction Neutral Spread Strategies.

Final Thoughts.

Chapter 8 Strategy – The Advanced Option Spreads.

Market Neutral, Volatility, and Earnings Spread Strategies.

Butterflies versus Condors.

Iron Spreads.

Iron Butterfly versus Iron Condor.

Final Thoughts.

Chapter 9 Advanced Concepts.

Put-Call Parity, Interest-Rates, Dividends, and Forwards.

Synthetics and More on Put-Call Parity.

Final Thoughts.

Chapter 10 A Revolutionary Approach to the Mind Games of the Markets:  Understand How Emotions Influence Trading.

Trading is Like Weather Forecasting.

What is Psych Cap?

Strategies and Tactics for Large Psych Cap Balances.

About the Contributor.

Chapter 11 Turning Your Trading into a Business.

Learning the Dollar.

Education.

The Formative Process.

Tips and Formulas for Budgetary Success.

Setting Up a Legal Entity.

Guidelines, Indicators, and Birds of Prey.

Final Thoughts.

About the Contributor.

Notes.

About the Author.

Index.

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Jared A. Levy got his start trading as an options market maker and specialist in the pits of the Philadelphia and American Stock Exchanges in the '90s. Now as an exclusive CNBC contributor, he offers his commentary to the world as part of CNBC's Fast Money team and appears on several programs throughout the network. Jared is also featured and quoted in numerous industry publications both online and in print. He has been featured on Bloomberg, Fox, and several other radio and TV networks over the years. In 2006, he won an Emmy for his daily video, "Trader Cast." More recently, he served as the Senior Derivatives Specialist for PEAK6 Investments, L.P., and is currently an editor for Taipan Publishing Group.

Through his many seminars and courses, Jared Levy has educated tens of thousands of investors on how to successfully and consistently trade and invest for a living, while keeping risk low. He teaches a practical, straightforward approach to investing that involves analyzing equities, derivatives, and the markets as a whole, as well as both simple and complex strategies and the use of diverse instruments.

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