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. Mark Sebastian's new edition 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. The book demonstrates how to structure a portfolio of trades that makes more money with less risk. …mehr
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. Mark Sebastian's new edition 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. The book demonstrates how to structure a portfolio of trades that makes more money with less risk.
Mark Sebastian is a former member of both the Chicago Board Options Exchange and the American Stock Exchange. CIO of Karman Line Capital and the founder of Option Pit Mentoring and Consulting, a Chicago based option education firm, Sebastian has been published nationally on Yahoo Finance, quoted in the Wall Street Journal, Reuters, and Bloomberg and is a writer for Real Money on TheStreet.com. Mark is also the managing editor for Expiring Monthly: The Option Traders Journal an all digital, all options magazine. Mark has spoken for the CBOE, the ISE, CME, VOLX and is a co-host on the popular "Option Block" Podcast and is the "Volatility Reporter" for the Volatility Views podcast. Mark has a Bachelor's in Science from Villanova University.
Inhaltsangabe
Part I: Professional Lessons Every Trader Needs to Know 1
Chapter 1: Trading in Options 3
The TOMIC 4
Build an Infrastructure 5
Build a Trading Plan 6
Select Trades Based on Articulated Criteria 7
Manage Risks 8
Learn All the Essential Elements of Trading 9
Chapter 2: Risk Management 11
The Pricing Model 12
Delta 12
Change in Underlying Price 14
Change in Strike Price 15
Time to Expiration 15
Volatility 16
Gamma 17
Price of the Underlying 19
Strike Price 20
Time to Expiration 20
Volatility 22
Vega 25
Price of the Underlying 25
Strike Price 26
Time to Expiration 27
Volatility 28
Theta 29
Price of the Underlying 29
Strike Price 30
Time to Expiration 33
Chapter 3: Market Makers, Risk, and the Individual Trader 35
How Market Makers Make Money 35
Skew 38
Term Structure 39
Market Maker Size 39
Market Maker Global Risk 41
Chapter 4: Volatility 43
Realized Volatility 43
Zone 1 Ultralow Volatility 43
Zone 2 46
Zone 3 47
Zone 4 50
Implied Volatility 51
Zone 1 52
Zone 2 52
Zone 3 53
Zone 4 54
Chapter 5: What Is Edge? 57
Edge 57
10 Day HV 58
20 Day HV 59
60 Day HV 59
Review the IV of the Product 60
IV30 61
Term Structure 62
Skew 63
Know the Zone of the Market 65
Select the Trade 67
Chapter 6: Locking in Edge 69
The Retail Trader 70
Establish the Option You Want to Execute 70
Establish the Offsetting Contract 71
The Hard and Soft Side of a Trade 71
Execute, Manage, Exit 73
Part II: Using Spreads 75
Chapter 7: A Quick Review of Spreads 77
The Call Spread 77
The Put Spread 79
The Straddle 82
Short Straddle 83
The Strangle 85
The Iron Butterfly 87
The Short Iron Butterfly 87
The Long Iron Butterfly 91
Standard Butterfly 92
The Iron Condor 94
The Short Iron Condor 94
The Calendar Spread 97
The Long Calendar 97
Short Calendar 99
Front and Back Spreads 100
Back Spreads 100
The Front Spread 101
Chapter 8: Adding Edge to Spreads 105
Credit/Debit Spreads 105
Volatility 108
Skew 110
Management 113
A Few Words on Adjusting 115
Chapter 9: Butterflies and Condors 117
The Butterfly 117
Trading a Butterfly 119
Targeting Profit in a Butterfly 124
Condors 124
Strangle 125
IV and HV 126
Skew 128
Set Up and Management 129
Chapter 10: The Front Spread 131
What Is a Front Spread? 131
Creating a Front Spread 132
IV 133
Skew 136
HV 137
The Broken Wing Butterfly 138
Trade Management 139
Aggressive Management 139
Passive Management 139
Beginning of Front Spread in TSLA 140
Target Profit 142
Broken Wing Butterfly Variation 142
Chapter 11: Calendar Spreads 145
Creating a Calendar 146
Evaluate Overall Implied Volatility 147
Evaluate Term Structure 148
Evaluate Event Risk 149
Evaluate Realized Volatility 150
Choose the Right Strikes 151
Execute the Trade 152
Manage the Trade 154
Exit 154
Part III: Gobal Risk 155
Chapter 12: How a Market Maker Trades 157
Market Making 157
The Trader 160
Step 1161
Step 2 161
Step 3 161
Step 4 162
Chapter 13: Portfolio Greeks 165
Delta 165
Gamma 166
Theta and Vega 167
Theta 167
Vega 168
Managing a Book 172
Chapter 14: Crisis Alpha 175
Defining a Market Crisis 175
Lehman Brothers Bankruptcy 176
VIX Term Structure Determines 'Value' for VIX Derivatives 177
"There's no other person that understands volatility more than Mark Sebastian. ... This is the best book on how to diversify with products and strategic trade structure; to thrive in any market ... a gamechanger for average investors to become richer, wiser and happier."-- Joshua M. Belanger, Founder of CounterVest & CEO of Belanger Capital
"Another wonderful book from Mark Sebastian ... this book is written by a trader for traders. ... [It will] enable traders to understand where edge is found and execute on that knowledge. This combination is required to make money consistently."-- Greg Magadini, CEO of Genesis Volatility
"In Trading Options For Edge Mark Sebastian shares useful strategies used by professional option traders that will enhance the alternatives for all levels of trader."-- Russell Rhoads, Head Research, EQDerivative
"...through practice, discipline, and continuing education, I assure you that you can master trading. All the tools you need lie in the pages ahead."-- From the Foreword by Garrett Baldwin, Founder and Chief Economist, AJB Capital Research Executive Producer, Money Morning LIVE!
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