Options and Options Trading 

Description:

In the options market, it always comes down to you versus them. Thing is, they've been at it a lot longer than you, and have years of hands-on experience navigating the tricks and traps of profitable options trading. Before you take your place at the table, it's in your best interest to discover how options really work, and how they can work for you. Options and Options Trading translates the foreign language of options into plain English. Based on Robert Ward's experience as a Merrill Lynch head trader as well as his popular New York University trading and options course, this step-by-step primer explains what options are, introduces basic valuation and trading concepts, and demystifies this versatile trading vehicle. Knowledge on Wall Street rarely comes cheap, and the options market can be a particularly expensive tutor. Let Options and Options Trading provide you with the insight you need to understand what is happening and why, and give you a head start on making options a low-risk, high-return part of your overall portfolio.

Options trading can look simple from afar. And frankly, the basics aren't all that difficult to grasp. But while this seeming simplicity has helped a few lucky traders garner fast fortunes, it is far more common to see inexperienced traders wearing bull's-eyes -- with market veterans gladly lining up and taking aim. Options and Options Trading will open your eyes to the potentials and realities of real-world options trading. Written by Robert Ward, a former head trader who has devoted his career to introducing options neophytes to the ways of the markets, this no-nonsense book provides today's best introduction to the complex options arena. Every important aspect of buying, selling, and profiting from options is introduced and explained.

Options are one of today's most versatile and valuable tools for traders and investors of every type and budget. Those who take the time to learn their intricacies generally find that options are ideal for increasing their odds of success. Traders and investors who don't invest the time required to get truly comfortable with the realities of options trading, however, soon find themselves back on the sidelines -- licking their wounds and wondering where they went wrong. Before you enter the tricky world of options trading, get the foundation of knowledge you need to minimize surprises and compete with the best. Options and Options Trading takes you by the hand and walks you through today's most intuitive analysis of options. Mathematically straightforward and refreshingly unbiased, it is today's most clear-eyed look at derivatives trading -- and will give you the solid foundation you need for success in the profitable yet perilous world of options trading.

Contents:

Foreword vii
Preface: On Taking Risk and Blowing Up xi
Part 1 The Basics
Chapter 1 What a Derivative Is and What It Isn't 3
Chapter 2 Binomials and Coin Tosses 31
Chapter 3 Pascal's Triangle and the Binomial Theorem 47
Chapter 4 Distributions Are the Key--What Are Distributions? 59
Chapter 5 Probabilities, Odds, and Payoffs 73
Chapter 6 Writing Our First Option 85
Chapter 7 Sectors, Strike Prices, and Summation Signs 97
Chapter 8 The Fair Price of an Option 109
Chapter 9 Our First Stock Option: IBM 119
Chapter 10 Statistics: The 15-Minute Cram Course 135
Chapter 11 Dow Jones versus Coin Tosses 145
Chapter 12 Turning Spot Prices into Forward Prices: S x e[superscript RT] 159
Part 2 The Formula
Chapter 13 Skeleton for an Option Formula 181
Chapter 14 Getting Comfortable with the Black-Scholes Formula 195
Chapter 15 Introducing Volatility and SKIT-V 203
Chapter 16 Pros and Cons of the Black-Scholes Formula 209
Part 3 Trading
Chapter 17 A Primer on Risk and Hedging 223
Chapter 18 Option Risk: Finding It and Hedging It 247
Chapter 19 How Traders Make Money (Customers) 273
Chapter 20 How to Convert Puts and Calls: CPL.PCS 289
Chapter 21 The Best Option Strategies 297
Chapter 22 Market Insights and Edges 321
Answer Key 339
Index 405