Equity and Index Options Explained

by Beagles, W. A.

• ISBN13: 9780470697177
• ISBN10: 0470697172
• Edition: 1st
• Format: Hardcover
• Copyright: 2009-05-26
• Publisher: Wiley

Summary

In 2007 over 400 million equity option contracts were traded but it is a volatile market, prices are ever changing with supply and demand - the only certainty is that they will change. With little knowledge or experience, an uninformed decision can quickly drain capital. This book explains equity options from absolute basics, assuming no prior knowledge of the subject. It shows traders starting out and already using the exchanges how to enhance their equity portfolio by using the whole range of investment opportunities and tools available. This will help investors to reduce their costs, enhance returns and manage price risk with certainty and precision. Equity Options Explained is a practical guide to trading equity options, supported by Liffe (part of the NYSE Euronext exchange group). Written by Bill Beagles, a well known, highly experienced trader and trainer, creating a unique combination in this area. Bill is still highly active in the markets, which brings a practical perspective to his training and the books.

Author Biography

Bill Beagles, London UK, is a founder member of K2 Ltd. K2 is a training and consultancy company specializing in derivatives trading, education and consultancy.

Liffe is the European derivatives business of NYSE Euronext, the transatlantic exchange group formed in 2007. Liffe operates derivatives markets in Amsterdam, Brussels, Lisbon, London and Paris.

Table of Contents

Foreword	p. vii
Preface: Trading Language and Products	p. ix
Option Basics	p. 1
Option Specifications	p. 9
Exercise and Assignment	p. 13
Option Uses	p. 19
Option Price and Value	p. 31
"Moneyness"	p. 39
Pricing Options	p. 43
Skew	p. 61
Option Pricing Revisited: the "Greeks"	p. 71
Basic Option Strategy	p. 95
Option Spreads	p. 105
The Collar (Fence)	p. 107
Long Call Spreads (Bull Call Spreads)	p. 119
Long Put Spreads (Bear Put Spreads)	p. 127
Short Call Spreads (Bear Call Spreads)	p. 139
Short Put Spreads (Bull Put Spreads)	p. 147
Selling Naked Puts versus Selling Put Spreads	p. 151
Long Verticals versus Short Verticals	p. 157
Long Straddles	p. 161
Long Strangles	p. 167
Short Straddles	p. 173
The Iron Butterfly	p. 179
Short Strangles	p. 185
The Iron Condor	p. 187
Calendar Spreads	p. 193
Long Call Calendars	p. 195
Short Call Calendar Spreads	p. 201
Long Put Calendar Spreads	p. 205
Short Put Calendar Spreads	p. 209
Diagonal Spreads	p. 213
Yield Enhancement	p. 219
Gamma Trading	p. 223
Resources	p. 233
Summary	p. 235
Glossary	p. 237
Index	p. 247
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