Think Like an Option Trader: How to Profit by Moving from Stocks to Options

Book description



  • Understand the unique dynamics of options trades and markets

  • Practical, concise insights based on actual option trading scenarios

  • Master trade selection, risk management, and more

  • By professional options trader Michael Benklifa, best-selling author of Profiting with Iron Condor Options

  • Want to win in options? You must think like a professional option trader. Step #1: Get rid of the habits you learned in stock trading: they’re killing you! Step #2: Understand the real dynamics of options markets: they are radically, fundamentally different.

    Example: When stock traders look at price, they see information. Option traders see probability, time, and volatility. Example: Stock trading is about having an information advantage. Option trading can be about exploiting a lack of information. Example: Stocks either go up or they don’t. Option trades can be structured for a 90% probability of success.

    With dynamics like these, option trading is like nothing else. Through practical, simple examples, Michael Benklifa will help you understand what’s really going on here…so you can consistently build trades that earn profits and control risk!

    Table of contents

    1. About This eBook
    2. Title Page
    3. Copyright Page
    4. Dedication Page
    5. Contents
    6. Acknowledgments
    7. About the Author
    8. Preface
      1. The Myth of Sisyphus
    9. Introduction: Why Traders Fail
      1. Is Failure a Flaw?
      2. Blaming Emotions
      3. Blaming Systems
      4. Successful Traders Versus Successful Trading
      5. Trading for a Living
      6. Trade for the Right Reasons
      7. The Ability to Duplicate a Strategy
      8. Correlation Versus Causation
      9. Don’t Trade to Make Money
      10. Leverage
      11. What Kind of Trader Are You?
      12. A Single Difference Goes a Long Way
      13. A Limited Worldview
    10. 1. Understanding Options
      1. What Is a Stock?
      2. What Is an Option?
      3. The Bet You Wouldn’t Make
      4. The Options Trader’s Toolbox
    11. 2. What Is Price?
      1. How a Stock Trader Looks at Stock Price
      2. How Options Traders Look at Stock Price
      3. How an Options Trader Looks at an Option’s Price
    12. 3. Pure Options Trading: Building Your Own Trade
      1. Basic Greek Concepts
      2. Build 1: Making a Directionless Trade
      3. Build 2: Reducing Your Risk
      4. Build 3: Augmented Returns
      5. Bending the Curve
      6. The Options Trader’s Toolbox: Synthetic Straddles
      7. Evolving a Trade
      8. In-, At-, and Out-of-the-Money Trades
    13. 4. Situational Trading
      1. Known Knowns
      2. Analyzing Situations
      3. Building a Directional Trade
      4. Known Unknowns
      5. Unknown Unknowns
    14. 5. Risk Management
      1. Responsibility in Trading
      2. Strategy Is Risk Management
      3. How a Stock Trader Measures Risk
      4. Defined Risk for Options Traders
      5. Layering and Unlayering Trades
      6. Trades Cannot Be Fixed, Just Replaced
      7. Portfolio Risk
      8. Concluding Remarks
    15. Appendix: Quantum Physics and Trading—The Price Uncertainty Principle
    16. Index
    17. FT Press

    Product information

    • Title: Think Like an Option Trader: How to Profit by Moving from Stocks to Options
    • Author(s): Michael Benklifa
    • Release date: May 2013
    • Publisher(s): Pearson
    • ISBN: 9780133065343