Financial Times Guide to Options: The Plain & Simple Guide to Successful Strategies, 2nd ed. (Financial Times Guides)

This is a down to earth guide to options and options strategies that private investors need, and that learning professionals have been quietly searching for. 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 Cover......Page 1 The Financial Times Guide to Options......Page 2 This book is dedicated to the memory of my parents......Page 6 Contents......Page 8 Preface......Page 10 About this book......Page 11 About the author......Page 13 Acknowledgements......Page 14 Introduction......Page 15 Part 1 Options fundamentals......Page 18 Introduction......Page 20 The basics of calls......Page 24 The basics of puts......Page 34 Pricing and behaviour......Page 42 Volatility and pricing models......Page 54 The Greeks and risk assessment: delta......Page 64 Gamma and theta......Page 70 Vega......Page 80 Part 2 Options spreads......Page 84 Introduction......Page 86 Call spreads and put spreads, or one by one directional spreads......Page 90 One by two directional spreads......Page 102 Combos and hybrid spreads for market direction......Page 118 Volatility spreads......Page 126 Iron butterflies and iron condors: combining straddles and strangles for reduced risk......Page 138 Butterflies and condors: combining call spreads and put spreads......Page 148 The covered write, the calendar spread and the diagonal spread......Page 168 Part 3 Thinking about options......Page 178 Introduction......Page 180 The interaction of the Greeks......Page 182 The cost of the Greeks......Page 194 Options talk 1: technical analysis and the Vix......Page 200 Options talk 2: trading options......Page 204 Options talk 3: troubleshooting and common problems......Page 210 Volatility skews......Page 216 Part 4 Basic non-essentials......Page 234 Introduction......Page 236 Futures, synthetics and put–call parity......Page 238 Conversions, reversals, boxes and options arbitrage......Page 250 Conclusions......Page 258 Questions and answers......Page 262 Glossary......Page 320 Further reading......Page 325 Index......Page 327 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 The full text downloaded to your computer With eBooks you can: search for key concepts, words and phrases make highlights and notes as you study share your notes with friends eBooks are downloaded to your computer and accessible either offline through the Bookshelf (available as a free download), available online and also via the iPad and Android apps. Upon purchase, you'll gain instant access to this eBook. Time limit The eBooks products do not have an expiry date. You will continue to access your digital ebook products whilst you have your Bookshelf installed.