The Financial Times Guide to Options
The Plain and Simple Guide to Successful Strategies
The Financial Times Guide to Options, will introduce you to the
instruments and markets of options, giving you the confidence to trade successfully.
Options are explained in real-life terminology, using every-day examples and
accessible language. Introducing three key options markets – stocks, bonds and
commodities, the book explains options contracts from straight vanilla options to
strangles and butterflies and covers the fundamentals of options pricing and trading
Originally published as Options Plain and Simple , this new edition includes:
- How the options industry operates and how basic strategies have evolved
- Risk management and how to trade safely
- Inclusion of new products such as exchange traded funds
- A glossary of key words and further reading
- Addition of market scenarios and examples
Like all investment strategies, options offer potential return while incurring
potential risk. The advantage of options trading is that risk can be managed to a greater
degree than with outright buying or selling.
The Financial Times Guide to Options is a straightforward and practical introduction to
the fundamentals of options. It includes only what is essential to basic understanding and
presents options theory in conventional terms, with a minimum of jargon. This thorough
guide will give you a basis from which to trade most of the options listed on most of the
major exchanges. The Financial Times Guide to Options includes:
- Options in everyday life
- The basics of calls
- The basics of puts
- Pricing and behaviour
- Volatility and pricing models
- The Greeks and risk assessment: delta
- Gamma and theta
- Vega
- Call spreads and put spreads, or one by one directional spreads
- One by two directional spreads
- Combos and hybrid spreads for market direction
- Volatility spreads
- Combining straddles and strangles for reduced risk
- Combining call spreads and put spreads
- The covered write, the calendar spread and the diagonal spread
- The interaction of the Greeks
- Options performance based on cost
- Trouble shooting and common problems
- Volatility skews
- Futures, synthetics and put-call parity
- Conversions, reversals, boxes and options arbitrage
Table of Contents
Preface
About the author
About this book
Introduction
Part 1 – Options fundamentals
1 Options in Everyday life
2 The basics of calls
3 The basics of puts
4 Pricing and behaviour
5 Volatility and pricing models
6 The Greeks and risk assessment: delta
7 Gamma and theta
8 Vega
Part 2 - Options spreads
9 Call spreads and put spreads
10 One by two directional spreads
11 Combos and hybrid spreads for market direction
12 Volatility spreads
13 Iron butterflies and iron condors
14 Butterflies and condors
15 The covered write, the calendar spread and the diagonal spread
Part 3 – Thinking about options
16 The interaction of the Greeks
17 Options performance based on cost
18 Options talk 1
19 Options talk 2: trouble shooting and common problems
20 Volatility skews
Part 4 – Basic non-essentials
21 Futures, synthetics and put-call parity
22 Conversions, reversals, boxes and options arbitrage
23 Conclusion
Glossary
Suggestions for further reading
Index of underlying contracts
Index
336 pages, Paperback