Vertical Option Spreads, + Website: A Study of the 1.8 Standard Deviation Inflection Point

285 Pages·2013·6.2 MB·English

by  Charles Conrick IV

CONTENTS
Cover
Half Title
Series Page
Title Page
Copyright Page
Dedication
Preface
Free 180-day Trial of Crystal Ball Software
Chapter 1: Introduction
Sophisticated versus Casual Investing
Hurricane Hits New York City
Changing Course
Steve Plays Craps
Retirement Funds That Don't Grow
Talking Heads
What Is Covered
Why This Book?
Chapter 2: How to Be a Wizard
Fundamentals
Auditor's Opinion
Statement of Cash Flows
Income Statement
Balance Sheet
Footnotes and Conclusion
Technical Indicators
RSI
Bollinger Bands
Moving Average
Patterns
Geopolitical Events
Chapter 3: Trading Platforms
Online Brokerage Firms
Analytical Capability
Customer Service
Real-Time or Delayed
Speed of Order Execution
Commissions and Fees
Opening an Account and Summary
Chapter 4: Vertical Spreads and the Iron Condor
Why Use Vertical Spreads?
Debit Spreads and Credit Spreads
Bull Put Spread
Bear Call Spread
Iron Condor
Why Use an Iron Condor If It Has Double-Sided Risk?
You Can't Pick Market Direction
Chapter 5: Structuring a Trade
Structuring the Trade
Closing a Trade or setting a Stop Loss
Chapter 6: A Brief Visit with the Greeks
Delta
Gamma
Rho
Theta
Vega
Chapter 7: Risk and Psychology of Investing and Spread
Trading
An Introduction to Risk
Overconfidence Bias
Anchoring
Mental Accounting
Confirmation and Hindsight Bias
Gambler's Fallacy
Herd Behavior
Availability Bias
Prospect Theory: Loss Aversion Bias
Conclusions on Risk and Behavioral Biases
Chapter 8: Normal Distribution, Probability, and Modern
Financial Theory
Skewness and Kurtosis
Modern Portfolio Theory
The CAPM
The Black-Scholes Model
The Sombrero
Chapter 9: The 1.8 Standard Deviation Solution
Weekly Options
Computing Standard Deviation per Day
Actual Volatility (AV) Estimating
The Amazing Spreadsheet and Historical Data on SPY
Monte Carlo Simulation Using Oracle's Crystal Ball Software
Introduction to Crystal Ball and Trading Spreadsheet Setup
Crystal Ball Simulation and Report Interpretation
Setting Up and a Brief Walkthrough of a Typical Weekly Trade
Chapter 10: More Using Your Crystal Ball and
Probability
A Review of Crystal Ball Tools
Credit Spreads
Debit Spreads
Iron Condors
Plain Vanilla: Calls and Puts
Straddles, Strangles, and Butterflies
Optquest and Predictor
Reflections on Probability, Monte Carlo Simulation, and Future
Research
Chapter 11: Conclusion
The Weekly Trade Process
Finis
References
About the Website
Index
VERTICAL
OPTION
SPREADS
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VERTICAL
OPTION
SPREADS

A Study of the 1.8 Standard
Deviation Inflection Point

Charles Conrick IV
Scott Hanson
Cover image: © iStockphoto.com/axllll
Cover design: Wiley
Copyright © 2013 by Dr. Charles Conrick IV and Scott Hanson. All rights
reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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