The Options Edge: An Intuitive Approach to Generating Consistent Profits for the Novice to the Experienced Practitioner

350 Pages·2016·2.67 MB·English

by  Michael C. Khouw

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T O E F T
HE PTIONS DGE + REE RIAL
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T O E
HE PTIONS DGE
F T
+ REE RIAL
An Intuitive Approach to Generating Consistent Profits
for the Novice to the Experienced Practitioner
Michael C. Khouw
Mark W. Guthner, CFA
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CopyrightC2016byMarkW.Guthner,CFA,andMichaelC.Khouw.Allrightsreserved.
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LibraryofCongressCataloging-in-PublicationData:
Names:Guthner,Mark,author.|Khouw,Michael,1968–author.
Title:Optionsplay:anintuitiveapproachtogeneratingconsistentprofitsforthenovicetotheexperienced
practitioner/MarkW.Guthner,MichaelKhouw.
Description:Hoboken,NewJersey:JohnWiley&Sons,Inc.,[2016]|Series:Wileytrading|Includes
bibliographicalreferencesandindex.
Identifiers:LCCN2015043835(print)|LCCN2015049131(ebook)|ISBN9781119212416(paperback)|
ISBN9781119212447(pdf)|ISBN9781119212423(epub)
Subjects:LCSH:Options(Finance)
Classification:LCCHG6024.A3G882016(print)|LCCHG6024.A3(ebook)|DDC332.63/2283—dc23
LCrecordavailableathttp://lccn.loc.gov/2015043835
Coverimage:Wiley
Coverdesign:CTimashovSergiy/Shutterstock
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
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CONTENTS
Introduction 1
CHAPTER1 WhatIsanOption,andHowDo
OptionsWork? 11
v
CHAPTER2 ValuingOptionswiththeBlack–Scholes–
MertonOption-PricingModel 29
CHAPTER3 TradingVolatility 65
CHAPTER4 AreOptionsFairlyPriced? 97
CHAPTER5 FundamentalOptionStrategies 125
CHAPTER6 PortfolioHedgingProducingEnhanced
Returns 155
CHAPTER7 OptionStrategiesforSpecialSituations 193
CHAPTER8 ExtractingInformationfromOptionsPrices 213
CHAPTER9 Synthetics 235
CHAPTER10 HomeRuns 253
CHAPTER11 Strike-Outs 277
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Notes 305
Glossary 311
References 319
AboutOnlineEducationandOptionTradingTools 323
AbouttheFreeTrial 329
Index 331
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We would like to thank EZTrade.Com for providing us with historical
time series data concerning asset, index and option prices along with
the associated implied volatility data used to generate the charts and
analysis provided in this book. In addition, economic and interest rate
data used came from the Federal Reserve Economic Database (FRED,
Research.StLouisFed.Org) provided by the Federal Reserve Bank of
St. Louis. Finally, data concerning the energy markets came from The
InternationalEnergyAgency(IEA,IEA.Org)andtheUSDepartmentof
Energy (DOE, Energy.Gov)
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