Table of Contents
List of Figures. 1 Option History, Definitions, and Terms.
Underlying Instruments.
Option Terms.
The Cost of an Option.
The History of Listed Options.
Option Trading Procedures.
Electronic Trading.
Exercise and Assignment.
Futures and Futures Options.
Influences on an Option’s Price.
Delta.
Technical Analysis.
2 An Overview of Option Strategies.
Profit Graphs.
Outright Option Buying.
Using Long Options to Protect Stock.
Buying Both a Put and a Call.
Selling Options.
Spreads.
Ratio Strategies.
Summary.
3 The Versatile Option.
Options as a Direct Substitute for the Underlying.
Options as a Proxy for the Underlying.
The Effect of Stock Index Futures on the Stock Market.
The Effect of Index Futures and Index Option Expiration on the Stock Market.
Options as an Insurance Policy.
The Collar.
Hedging with Over-the-Counter Options.
Using Volatility Futures as Portfolio Insurance.
Summary.
4 The Predictive Power of Options.
Using Stock Option Volume as an Indicator.
Using Option Prices as an Indicator.
Implied Volatility Can Predict a Change of Trend.
The Put–Call Ratio.
Futures Options Volume.
On Moving Averages.
Summary.
5 Trading Systems and Strategies.
Incorporating Futures Fair Value into Your Trading.
Day-Trading Vehicles.
The TICKI Day -Trading System.
A Short-Term Trading System.
Intermarket Spreads.
Other Seasonal Tendencies.
Summary.
6 Trading Volatility and Other Theoretical Approaches.
Volatility.
Delta Neutral Trading.
Predicting Volatility.
Comparing Historical and Implied Volatility.
Trading Implied Volatility.
The “Greeks.”
Trading the Volatility Skew.
The Aggressive Calendar Spread.
Using Probability and Statistics in Volatility Trading.
Expected Return.
Summary.
7 Other Important Considerations.
Support Activities.
Trading Methodology and Philosophy.
Option Trading Philosophy.
Summary.
Appendix A: Listed Index and Sector Options.
Appendix B: Futures Options Terms and Expirations.
Appendix C: Option Models.
Index.
