Option Spread Trading: A Comprehensive Guide to Strategies and Tactics

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Format: eBook
Pub. Date: 2010-12-01
Publisher(s): Wiley
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Summary

A practical guide to unlocking the power of option spreadsWhen dealing with option spreads your looking to purchase one option in conjunction with the sale of another option. If managed properly, these spreads can provide experienced investors with the potential for large returns without undertaking a great deal of risk.Option Spread Trading provides a comprehensive, yet easy-to-understand explanation of option spreads, and shows you how to select the best spread strategy for any given market outlook. Along the way, author Russell Rhoads discusses spread strategies that can be used to profit from a strong up or down directional move in a stock, a stagnant market, or a highly volatile market. He also details how you can harness the leverage of options to create a low-risk position that provides the potential for a big profit. All manner of spreads are covered, from calendar and horizontal spreads to vertical and diagonal spreads Highlights how you can monitor and adjust an existing spread position and provides tips on how to exit a spread trade Includes exercises and examples to test and reinforce your knowledge of the concepts presentedOption spread trading has become increasingly popular with active traders and investors. Gain a better understanding of this powerful approach with Option Spread Trading as your guide.

Table of Contents

Preface
Acknowledgments
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
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
Synthetic Positions
Put-Call Parity
Synthetic Long Positions
Synthetic Short Positions
Arbitrage in Put-Call Parity
Individuals Using Put-Call Parity
The Greeks
Price Related Greeks
Time Related Greek
Volatility Related Greek
Interest Rate Related Greek
Conclusion
Straddles
Long Straddle Mechanics
Short Straddle
Strangles
Long Strangle Mechanics
Short Strangle Mechanics
Bull Spreads
Bull Put Spread
Bull Call Spread
Bear Spreads
Bear Call Spread
Bear Put Spread
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 vs. Straddle
Condor Spreads
Introduction to Condor Spreads
Long Call Condor
Long Put Condor
Iron Condor
Iron Condor vs. Short Strangle
Short Condor Spreads
Reverse Iron Condor
Reverse Iron Condor vs. Long Strangle
Ratio Spreads
Call Ratio Spread
Put Ratio Spread
Ratio Spread Comparisons
Backspreads
Call Backspread
Put Backspread
Backspread Comparisons
The Stock Repair Strategy
Doubling Down on a Position
The Stock Repair Trade
Calendar Spreads
Time Value Effect
Long Call Calendar
Long Put Calendar
Combined Calendar Spread
Diagonal Spreads
Call Diagonal Spread
LEAPS Call Diagonal Spread
Put Diagonal Spread
LEAPS Put Diagonal Spread
Double Diagonal Spread
Delta Neutral Trading
Delta Review
Delta Neutral Positions
Gamma
Market Maker Trading
Executing a Spread Trade
Single Stock/Option 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
Table of Contents provided by Publisher. All Rights Reserved.

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