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Synopsis:

Veteran options trader Dan Passarelli explains a new methodology for option trading and valuation. With an introduction to option basics as well as chapters on all types of spreads, put-call parity and synthetic options, trading volatility and studying volatility charts, and advanced option trading, Trading Option Greeks holds pertinent new information on how more accurate pricing can drive profit.

Description:

Most options traders focus on strategies such as covered calls, vertical spreads, butterflies and condors, and so on. But traders often don't know how to use the "greeks"-the five factors that influence an option's price??to trade more effectively.

The "greeks" (Delta, Gamma, Theta, Vega, Rho) are tools to measure minute changes in an option's price based on corresponding changes in:

--Interest rates

--Time to expiration

--Price changes in the underlying security

--Volatility

--Dividends

Using the greeks can lead to more accurate pricing information that will alert an option trader to mispriced derivatives that can be exploited for profit. In straightforward language and making use of charts and examples, Passarelli explains how to use the greeks to be a better options trader.

The 'Greeks' of the book's title refers to the five factors that have the biggest impact on the price of an option - Delta (a change in the underlying instrument on which the option is based or from which it is derived), Rho (a change in the interest rate), Theta (a change in time), Vega (a change in the volatility of the underlying instrument) and Gamma (a change in delta). Most traders don't know how to use the 'Greeks' - factors that have the greatest influence on the price of an option - to trade more effectively. While many books on options dedicate a chapter to them in a very theoretical manner, no other book approaches the 'Greeks' from the perspective of using them as a unique trading opportunity. The author, who has trained thousands of traders (first at the Chicago Board Options Exchange, and now at the online brokerage, hedge fund and training firm, Peak 6) reveals how to unleash the power of the 'Greeks' to achieve investment success.