A practical guide to unlocking the power of option spreads
When dealing with option spreads your looking to purchase one
option in conjunction with the sale of another option. If managed
properly, these spreads can provide experienced investors with the
potential for large returns without undertaking a great deal of
risk.
Option Spread Trading provides a comprehensive, yet
easy-to-understand explanation of option spreads, and shows you how
to select the best spread strategy for any given market outlook.
Along the way, author Russell Rhoads discusses spread strategies
that can be used to profit from a strong up or down directional
move in a stock, a stagnant market, or a highly volatile market. He
also details how you can harness the leverage of options to create
a low-risk position that provides the potential for a big
profit.
* All manner of spreads are covered, from calendar and horizontal
spreads to vertical and diagonal spreads
* Highlights how you can monitor and adjust an existing spread
position and provides tips on how to exit a spread trade
* Includes exercises and examples to test and reinforce your
knowledge of the concepts presented
Option spread trading has become increasingly popular with
active traders and investors. Gain a better understanding of this
powerful approach with Option Spread Trading as your
guide.
Содержание
Preface xi
Acknowledgments xiii
CHAPTER 1 Essential Option Knowledge 1
The Option Basics 1
In-At-Out of the Money 5
Intrinsic and Time Value 6
Spread Basics 8
The Greeks 9
Payo Tables and Diagrams 10
Option Pricing Calculators 12
CHAPTER 2 Spreads Using an Underlying Security 15
Covered Call 15
Covered Call Using LEAPSQR 22
Systematic Covered Call Strategies 25
Cash-Secured Put 26
Systematic Cash-Secured Put 31
Protective Put 32
The Collar 33
CHAPTER 3 Synthetic Positions 37
Put-Call Parity 39
Synthetic Long Positions 40
Synthetic Short Positions 44
Arbitrage in Put-Call Parity 50
Individuals Using Put-Call Parity 52
CHAPTER 4 The Greeks 55
Price-Related Greeks 55
Time-Related Greek 61
Volatility-Related Greek 65
Interest Rate-Related Greek 67
Conclusion 69
CHAPTER 5 Straddles 71
Long Straddle Mechanics 72
Short Straddle 81
CHAPTER 6 Strangles 89
Long Strangle Mechanics 89
Short Strangle Mechanics 98
CHAPTER 7 Bull Spreads 107
Bull Put Spread 107
Bull Call Spread 114
CHAPTER 8 Bear Spreads 121
Bear Call Spread 121
Bear Put Spread 127
CHAPTER 9 Butterfly Spreads 135
Introduction to Buttery Spreads 136
Long Call Buttery 136
Long Put Buttery 139
Iron Buttery 142
Short Straddle Comparison 146
Short Call Buttery 149
Short Put Buttery 152
Reverse Iron Buttery 154
Reverse Iron Buttery versus Straddle 156
CHAPTER 10 Condor Spreads 159
Introduction to Condor Spreads 159
Long Call Condor 160
Long Put Condor 163
Iron Condor 166
Iron Condor versus Short Strangle 170
Short Condor Spreads 172
Reverse Iron Condor 176
Reverse Iron Condor versus Long Strangle 179
CHAPTER 11 Ratio Spreads 183
Call Ratio Spread 184
Put Ratio Spread 189
Ratio Spread Comparisons 192
CHAPTER 12 Backspreads 199
Call Backspread 199
Put Backspread 203
Backspread Comparisons 207
CHAPTER 13 The Stock Repair Strategy 213
Doubling Down on a Position 214
The Stock Repair Trade 215
CHAPTER 14 Calendar Spreads 219
Time Value Eect 220
Long Call Calendar 221
Long Put Calendar 224
Combined Calendar Spread 227
CHAPTER 15 Diagonal Spreads 231
Call Diagonal Spread 231
LEAPS Call Diagonal Spread 234
Put Diagonal Spread 237
LEAPS Put Diagonal Spread 239
Double Diagonal Spread 241
CHAPTER 16 Delta Neutral Trading 245
Delta Review 245
Delta-Neutral Positions 246
Gamma 250
Market Maker Trading 251
CHAPTER 17 Executing a Spread Trade 255
Executing a Stock or Option Trade 256
A Single Option Spread 258
A Spread with Two Options 260
A Spread with Multiple Legs 261
Legging into a Spread Trade 265
About the Author 269
Index 271
Об авторе
RUSSELL RHOADS is an instructor for the Options Institute at the Chicago Board Options Exchange. He conducts about ninety classes a year and, in addition, conducts webinars on behalf of the CBOE and a variety of brokerage firms. Rhoads’s twenty-year trading career included positions at a variety of trading firms and hedge funds. His background includes trading and analysis, and he is author of Candlestick Charting For Dummies. Rhoads graduated the University of Memphis with a MS in finance and has a master’s certificate in financial engineering from the Illinois Institute of Technology.