Book description
Top options expert Larry Shover returns to discuss how to interpret, and profit from, market volatility
Trading Options in Turbulent Markets, Second Edition skillfully explains the intricacies of options volatility and shows you how to use options to cope, and profit from, market turbulence. Throughout this new edition, options expert Larry Shover reveals how to use historical volatility to predict future volatility for a security and addresses how you can utilize that knowledge to make better trading decisions.
Along the way, he also defines the socalled Greeks—delta, vega, theta, and gamma—and explains what drives their values and their relationship to historic and implied volatility. Shover then provides effective strategies for trading options contracts in uncertain times, addressing the decisionmaking process and how to trade objectively in the face of unpredictable and irrational market moves.
Includes a new chapter of the VIX, more advanced material on volatility suitable for institutional or intermediate options trader, and additional volatilitybased strategies
Answers complex questions such as: How does a trader know when to tolerate risk and How does a successful trader respond to adversity?
Provides a different perspective on a variety of options strategies, including covered calls, naked and married puts, collars, straddles, vertical spreads, calendar spreads, butterflies, condors, and more
As volatility becomes a greater focus of traders and investors, Trading Options in Turbulent Markets, Second Edition will become an important resource for indepth insights, practical advice, and profitable strategies.
Table of contents
 Cover
 Contents
 Title
 Copyright
 Dedication
 Preface
 Acknowledgments
 Introduction

Part I: Understanding the Relationship between Market Turbulence and Option Volatility
 Chapter 1: Managing Risk and Uncertainty with Options

Chapter 2: Making Sense of Volatility in Options Trading
 Volatility as an Asset Class
 Analyzing Volatility with Implied Volatility
 What Does Implied Volatility Reveal?
 Making Trading Decisions Based on the Disparity between Historical and Implied Volatility
 Appreciating Volatility for All It Is Worth
 How Volatility Really Works on the Trading Floor
 Volatility and Uncertainty: Lessons for the Irrational Option Trader
 Varieties of Option Volatility Trading
 Chapter 3: Working with Volatility to Make Investment Decisions
 Chapter 4: Volatility Skew: Smile or Smirk?
 Chapter 5: Fixated on Volatility and the VIX

Part II: Understanding Option Volatility and Its Relationship to Option Greeks, Personal Decision Making, and Odds Creation
 Chapter 6: Extreme Volatility and Option Delta

Chapter 7: Smoke and Mirrors: Managing Gamma through Volatile Markets
 Gamma and Volatility
 Managing Positive Gamma during a HighVolatility Environment
 The Bad News: There’s Always More than Meets the Eye
 Practical Considerations for Managing Long Gamma in a HighVolatility Environment
 Managing Negative Gamma in a HighVolatility Environment
 Practical Considerations of Negative Gamma in High Volatility
 Gamma and Volatility with Respect to Time Structure
 Summary

Chapter 8: Price Explosion: Volatility and Option Vega
 The Relationship between Implied Volatility and Vega
 Implied Volatility: Price Analogy
 Option Vega and Time
 Option Vega and Its Greek Cousins
 Option Vega Implications
 Don’t Underestimate the Relationship between Volatility and Option Vega
 Volatility and Vega Insensitivity
 Important Concepts When Applying Option Vega in a Volatile Marketplace
 Summary
 Chapter 9: Sand in the Hourglass: Volatility and Option Theta
 Chapter 10: The Nuances of Volatility

Part III: Ten Proven Strategies to Employ in Uncertain Times
 Chapter 11: Preparing for Trading Using Volatility Strategies

Chapter 12: The BuyWrite, or the Covered Call
 The BuyWrite (Covered Call) Defined
 An Example of the Covered Call Strategy
 The Theory and Reality of the Covered Call
 Covered Call Writing and Implied Volatility
 Implied Volatility in Practice
 Managing Contracts in a Time of High Volatility or a Falling Market
 Effective Call Writing in a Volatile Market
 Chapter 13: Covering the Naked Put

Chapter 14: The Married Put: Protecting Your Profit
 Volatility, Downside Risk, and the Case for Portfolio Insurance
 Why Buy High Volatility?
 The Married Put
 How and When to Use a Married Put
 Example of When to Use a Married Put
 The Married Put: Limiting Loss, Neutralizing Volatility, and Unleashing Upside Potential
 Married Put: A RealLife Illustration
 Chapter 15: The Collar: Sleep at Night
 Chapter 16: The Straddle and Strangle: The Risks and Rewards of VolatilitySensitive Strategies

Chapter 17: The Vertical Spread and Volatility
 Introduction to the Vertical Spread
 A Trader’s Reasoning for Trading a Vertical Spread
 Designing Your Vertical Spread
 Vertical Spreads and Greek Exposure
 Vertical Spreads as a Pure Volatility Play
 Comparing Volatility’s Effect on Vertical Spreads
 Summary: Comparing Vertical Spreads and Implied Volatility
 Chapter 18: Calendar Spreads: Trading Theta and Vega
 Chapter 19: Ratio Spreading: Trading Objectives Tailor Made
 Chapter 20: The Butterfly Spread
 Chapter 21: Wingspreads
 About the Author
 Index
Product information
 Title: Trading Options in Turbulent Markets: Master Uncertainty through Active Volatility Management, 2nd Edition
 Author(s):
 Release date: December 2012
 Publisher(s): Bloomberg Press
 ISBN: 9781118343548
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