Option Spread Trading
A Comprehensive Guide to Strategies and Tactics
Published on 13. December 2010
336 pages
978-0-470-94432-5 (ISBN)
Description
A practical guide to unlocking the power of option spreads
When dealing with option spreads your looking to purchase oneoption in conjunction with the sale of another option. If managedproperly, these spreads can provide experienced investors with thepotential for large returns without undertaking a great deal ofrisk.
Option Spread Trading provides a comprehensive, yeteasy-to-understand explanation of option spreads, and shows you howto select the best spread strategy for any given market outlook.Along the way, author Russell Rhoads discusses spread strategiesthat can be used to profit from a strong up or down directionalmove in a stock, a stagnant market, or a highly volatile market. Healso details how you can harness the leverage of options to createa low-risk position that provides the potential for a bigprofit.
* All manner of spreads are covered, from calendar and horizontalspreads to vertical and diagonal spreads
* Highlights how you can monitor and adjust an existing spreadposition and provides tips on how to exit a spread trade
* Includes exercises and examples to test and reinforce yourknowledge of the concepts presented
Option spread trading has become increasingly popular withactive traders and investors. Gain a better understanding of thispowerful approach with Option Spread Trading as yourguide.
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Book
02/2011
Wiley
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Person
RUSSELL RHOADS is an instructor for the Options Institute at the Chicago Board Options Exchange. He conducts about ninety classes a year and, in addition, conducts webinars on behalf of the CBOE and a variety of brokerage firms. Rhoads's twenty-year trading career included positions at a variety of trading firms and hedge funds. His background includes trading and analysis, and he is author of Candlestick Charting For Dummies. Rhoads graduated the University of Memphis with a MS in finance and has a master's certificate in financial engineering from the Illinois Institute of Technology.
Content
Preface.
Acknowledgments.
CHAPTER 1 Essential Option Knowledge.
The Option Basics.
In-At-Out of the Money.
Intrinsic and Time Value.
Spread Basics.
The Greeks.
Payoff Tables and Diagrams.
Option Pricing Calculators
CHAPTER 2 Spreads Using an Underlying Security.
Covered Call.
Covered Call Using LEAPS¯®.
Systematic Covered Call Strategies.
Cash-Secured Put.
Systematic Cash-Secured Put.
Protective Put.
The Collar.
CHAPTER 3 Synthetic Positions.
Put-Call Parity.
Synthetic Long Positions.
Synthetic Short Positions.
Arbitrage in Put-Call Parity.
Individuals Using Put-Call Parity.
CHAPTER 4 The Greeks.
Price-Related Greeks.
Time-Related Greek.
Volatility-Related Greek.
Interest Rate-Related Greek.
Conclusion.
CHAPTER 5 Straddles.
Long Straddle Mechanics.
Short Straddle.
CHAPTER 6 Strangles.
Long Strangle Mechanics.
Short Strangle Mechanics.
CHAPTER 7 Bull Spreads.
Bull Put Spread.
Bull Call Spread.
CHAPTER 8 Bear Spreads.
Bear Call Spread
Bear Put Spread.
CHAPTER 9 Butterfly Spreads.
Introduction to Butterfly Spreads.
Long Call Butterfly.
Long Put Butterfly.
Iron Butterfly.
Short Straddle Comparison.
Short Call Butterfly.
Short Put Butterfly.
Reverse Iron Butterfly.
Reverse Iron Butterfly versus Straddle.
CHAPTER 10 Condor Spreads.
Introduction to Condor Spreads.
Long Call Condor.
Long Put Condor.
Iron Condor.
Iron Condor versus Short Strangle.
Short Condor Spreads.
Reverse Iron Condor.
Reverse Iron Condor vs. Long Strangle.
CHAPTER 11 Ratio Spreads.
Call Ratio Spread.
Put Ratio Spread.
Ratio Spread Comparisons.
CHAPTER 12 Backspreads.
Call Backspread.
Put Backspread.
Backspread Comparisons.
CHAPTER 13 The Stock Repair Strategy.
Doubling Down on a Position.
The Stock Repair Trade.
CHAPTER 14 Calendar Spreads.
Time Value Effect.
Long Call Calendar.
Long Put Calendar.
Combined Calendar Spread.
CHAPTER 15 Diagonal Spreads.
Call Diagonal Spread.
LEAPS Call Diagonal Spread.
Put Diagonal Spread.
LEAPS Put Diagonal Spread.
Double Diagonal Spread.
CHAPTER 16 Delta Neutral Trading.
Delta Review.
Delta-Neutral Positions.
Gamma.
Market Maker Trading.
CHAPTER 17 Executing a Spread Trade.
Executing a Stock or Option Trade.
A Single Option Spread.
A Spread with Two Options.
A Spread with Multiple Legs.
Legging into a Spread Trade.
About the Author.
Index.
