What is included with this book?
Acknowledgments | p. xi |
Introduction | p. xiii |
The Foundations of Options Trading | p. 1 |
Option Basics | p. 3 |
Definitions of Calls and Puts | p. 3 |
Are You Long or Short? | p. 4 |
Option Contract Size | p. 4 |
Is My Option In- or Out-of-the-Money? | p. 5 |
Option Trade Orders | p. 5 |
Option Expiration | p. 6 |
LEAPS Options | p. 7 |
Option Settlement | p. 7 |
Options Cycles | p. 8 |
Probability Distributions | p. 11 |
The Gaussian Distribution | p. 11 |
Application to the Real World | p. 12 |
Risk-Adjusted Returns | p. 15 |
High-Probability Trading | p. 17 |
Low-Probability Trading | p. 18 |
Options Trading Myths | p. 20 |
What Is a Conservative Trade? | p. 21 |
Exercises | p. 22 |
Options Pricing and Implied Volatility | p. 25 |
The Black Scholes Pricing Model | p. 25 |
The Greeks | p. 26 |
Implied Volatility | p. 27 |
Building the Price of an Option | p. 28 |
A Closer Look at the Greeks | p. 29 |
How Will We Use the Greeks? | p. 31 |
Exercises | p. 32 |
Vertical Spreads | p. 33 |
Building the Vertical Spread | p. 33 |
Effects of Implied Volatility | p. 35 |
Early Exercise | p. 41 |
Expiration and Exercise | p. 43 |
Margin Requirements | p. 44 |
Application of Probability Calculations | p. 45 |
Risk/Reward and Probability of Success | p. 46 |
Exercises | p. 47 |
Options Strategies for Income Generation | p. 49 |
Using Options to Boost Income in a Stock Portfolio | p. 51 |
The Classic Covered Call Strategy | p. 52 |
Strategic Considerations | p. 53 |
The Notorious Selling Naked Puts Strategy | p. 53 |
Selling Naked Puts for Income | p. 54 |
Buying Stocks at a Discount | p. 56 |
Combining the Covered Call with Selling Naked Puts | p. 56 |
Early Exercise | p. 58 |
Risk Management | p. 60 |
The Achilles' Heel of Directional Strategies | p. 61 |
Exercises | p. 62 |
Calendar and Double Calendar Spreads | p. 63 |
Vega Risk and Calendar Spreads | p. 66 |
Volatility Skews | p. 67 |
Searching for Calendar Candidates | p. 70 |
Entering and Managing the Trade | p. 71 |
Early Exercise | p. 71 |
Adjustments | p. 72 |
Out-of-the-Money Calendar Spreads | p. 73 |
Double Calendar Spreads | p. 73 |
Determining the Optimal Strike Prices | p. 76 |
Trade Management and Adjustments | p. 82 |
Multiple Calendar Spread Positions | p. 83 |
Exercises | p. 83 |
Double Diagonal Spreads | p. 85 |
Diagonal Spreads | p. 85 |
Double Diagonal Spreads | p. 87 |
Managing the Trade | p. 90 |
Double Diagonals vs. Double Calendars | p. 91 |
Exercises | p. 92 |
Butterfly Spreads | p. 95 |
At-the Money and Out-of-the-Money Butterfly Spreads | p. 95 |
Iron Butterfly Spreads | p. 99 |
The Broken-Wing Butterfly | p. 99 |
Margin Requirements | p. 101 |
Trade Management | p. 103 |
Closing Butterfly Spreads | p. 106 |
Butterfly Spreads as Adjustments | p. 111 |
Exercises | p. 112 |
Condor Spreads | p. 113 |
The Basic Condor Spread | p. 113 |
The Opportunistic Model | p. 116 |
The Insurance Model | p. 119 |
Iron Condor Spreads | p. 121 |
Vega Risk and the Condor | p. 124 |
The Short-Term Iron Condor | p. 128 |
The Long-Term Iron Condor | p. 129 |
Capital Management | p. 131 |
Risk Management | p. 131 |
Adjustment Techniques | p. 132 |
Adjustment Pros and Cons | p. 134 |
Adjustment Case Studies | p. 135 |
Managing the Iron Condor with the Greeks | p. 138 |
Advanced Adjustment Techniques | p. 140 |
Iron Condor Trading Systems | p. 140 |
Butterflies and Condors Are Cousins | p. 144 |
Exercises | p. 146 |
Delta-Neutral Trading Strategies | p. 149 |
Risk Management Systems | p. 151 |
Challenging Markets for the Delta-Neutral Trader | p. 152 |
Two Distinct Trading Philosophies | p. 153 |
The "Secret" of Success | p. 155 |
Make Your Trading a Business | p. 157 |
Getting Started | p. 157 |
Managing Losses | p. 159 |
The Trading Plan | p. 159 |
Money Management | p. 160 |
The Psychology of Trading | p. 161 |
Living with the Two-Headed Monster | p. 163 |
Required Tools for This Business | p. 164 |
What's Next? | p. 165 |
Appendix: Answers to the Chapter Exercises | p. 169 |
Glossary | p. 185 |
Index | p. 193 |
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