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Trading Options for Edge

Book Description

If you have experience in option trading, or a strong understanding of the options markets, but want to better understand how to trade given certain market conditions, this is the book for you. Many people have some knowledge of trading strategies, but have no idea how to pull it all together.

Mark Sebastian’s latest book will teach trade evaluation, using Greeks, trading various spreads under different market conditions, portfolio-building, and risk management. Sebastian’s approach will help traders understand how to find edge, what kind of trade under what conditions will capture edge, and how to create and successfully hedge to help you build your own personal Goldman Sachs or Merrill Lynch. The book demonstrates how to structure a portfolio of trades that makes more money with less risk.

Click here to watch the author's interviews with Fox Business and Nasdaq:

http://video.foxbusiness.com/v/5759956686001/

https://youtu.be/dOEJ118vMnA

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Contents
  6. Part I: Professional Lessons Every Trader Needs to Know
    1. Chapter 1: Trading in Options
      1. The TOMIC
      2. Build an Infrastructure
      3. Build a Trading Plan
      4. Select Trades Based on Articulated Criteria
      5. Manage Risks
      6. Learn All the Essential Elements of Trading
    2. Chapter 2: Risk Management
      1. The Pricing Model
      2. Delta
        1. Change in Underlying Price
        2. Change in Strike Price
        3. Time to Expiration
        4. Volatility
      3. Gamma
        1. Price of the Underlying
        2. Strike Price
        3. Time to Expiration
        4. Volatility
      4. Vega
        1. Price of the Underlying
        2. Strike Price
        3. Time to Expiration
        4. Volatility
      5. Theta
        1. Price of the Underlying
        2. Strike Price
        3. Time to Expiration
    3. Chapter 3: Market Makers, Risk, and the Individual Trader
      1. How Market Makers Make Money
        1. Skew
        2. Term Structure
        3. Market Maker Size
      2. Market Maker Global Risk
    4. Chapter 4: Volatility
      1. Realized Volatility
        1. Zone 1 Ultralow Volatility
        2. Zone 2
        3. Zone 3
        4. Zone 4
      2. Implied Volatility
        1. Zone 1
        2. Zone 2
        3. Zone 3
        4. Zone 4
    5. Chapter 5: What Is Edge?
      1. Edge
        1. 10 Day HV
        2. 20 Day HV
        3. 60 Day HV
      2. Review the IV of the Product
        1. IV30
      3. Term Structure
      4. Skew
      5. Know the Zone of the Market
      6. Select the Trade
    6. Chapter 6: Locking in Edge
      1. The Retail Trader
        1. Establish the Option You Want to Execute
        2. Establish the Offsetting Contract
        3. The Hard and Soft Side of a Trade
        4. Execute, Manage, Exit
  7. Part II: Using Spreads
    1. Chapter 7: A Quick Review of Spreads
      1. The Call Spread
      2. The Put Spread
      3. The Straddle
        1. Short Straddle
      4. The Strangle
      5. The Iron Butterfly
        1. The Short Iron Butterfly
        2. The Long Iron Butterfly
        3. Standard Butterfly
      6. The Iron Condor
        1. The Short Iron Condor
      7. The Calendar Spread
        1. The Long Calendar
        2. Short Calendar
      8. Front and Back Spreads
        1. Back Spreads
        2. The Front Spread
    2. Chapter 8: Adding Edge to Spreads
      1. Credit/Debit Spreads
        1. Volatility
        2. Skew
        3. Management
      2. A Few Words on Adjusting
    3. Chapter 9: Butterflies and Condors
      1. The Butterfly
        1. Trading a Butterfly
        2. Targeting Profit in a Butterfly
      2. Condors
        1. Strangle
        2. IV and HV
        3. Skew
        4. Set Up and Management
    4. Chapter 10: The Front Spread
      1. What Is a Front Spread?
        1. Creating a Front Spread
        2. IV
        3. Skew
        4. HV
      2. The Broken Wing Butterfly
        1. Trade Management
        2. Aggressive Management
        3. Passive Management
      3. Beginning of Front Spread in TSLA
        1. Target Profit
        2. Broken Wing Butterfly Variation
    5. Chapter 11: Calendar Spreads
      1. Creating a Calendar
        1. Evaluate Overall Implied Volatility
        2. Evaluate Term Structure
        3. Evaluate Event Risk
        4. Evaluate Realized Volatility
        5. Choose the Right Strikes
        6. Execute the Trade
        7. Manage the Trade
        8. Exit
  8. Part III: Gobal Risk
    1. Chapter 12: How a Market Maker Trades
      1. Market Making
        1. The Trader
        2. Step 1
        3. Step 2
        4. Step 3
        5. Step 4
    2. Chapter 13: Portfolio Greeks
      1. Delta
      2. Gamma
      3. Theta and Vega
        1. Theta
        2. Vega
      4. Managing a Book
    3. Chapter 14: Crisis Alpha
      1. Defining a Market Crisis
      2. Lehman Brothers Bankruptcy
        1. VIX Term Structure Determines ‘Value’ for VIX Derivatives
      3. Crisis Alpha Approaches
        1. Approach 1: Tactical Long VIX
        2. Approach 2: Low Cost-of-Carry Options Structures
      4. Exit Strategy
  9. Part IV: Appendices
    1. Appendix A: Important Terms
      1. Historical Volatility (HV)
      2. Short-Term Historical Volatility
      3. Intermediate-Term Historical Volatility
      4. Long-Term Historical Volatility
      5. Realized Volatility (RV)
      6. Forward Volatility
      7. Implied Volatility (IV)
      8. Calls and Puts
      9. Skew
      10. Term Structure
      11. Volatility Index (VIX)
      12. Delta
      13. Gamma
      14. Theta
      15. Vega
    2. Appendix B: Best Blogs
  10. Index