Top options expert Larry Shover returns to discuss how to interpret, and profit from, market volatility Trading Options in Turbulent Markets, Second Edition skillfully explains the intricacies of options volatility and shows you how to use options to cope, and profit from, market turbulence. Throughout this new edition, options expert Larry Shover reveals how to use historical volatility to predict future volatility for a security and addresses how you can utilize that knowledge to make better trading decisions. Along the way, he also defines the so-called Greeks-delta, vega, theta, and gamma-and explains what drives their values and their relationship to historic and implied volatility. Shover then provides effective strategies for trading options contracts in uncertain times, addressing the decision-making process and how to trade objectively in the face of unpredictable and irrational market moves. Includes a new chapter of the VIX, more advanced material on volatility suitable for institutional or intermediate options trader, and additional volatility-based strategies Answers complex questions such as: How does a trader know when to tolerate risk and How does a successful trader respond to adversity? Provides a different perspective on a variety of options strategies, including covered calls, naked and married puts, collars, straddles, vertical spreads, calendar spreads, butterflies, condors, and more As volatility becomes a greater focus of traders and investors, Trading Options in Turbulent Markets, Second Edition will become an important resource for in-depth insights, practical advice, and profitable strategies.
Preface xiii Acknowledgments xv Introduction xvii PART I: UNDERSTANDING THE RELATIONSHIP BETWEEN MARKET TURBULENCE AND OPTION VOLATILITY 1 CHAPTER 1 Managing Risk and Uncertainty with Options 3 What Is Risk? 4 What Is Uncertainty? 4 Seven Lessons Learned from Market Volatility 5 Understanding Derivatives 7 The Six Benefits of Options 9 CHAPTER 2 Making Sense of Volatility in Options Trading 13 Volatility as an Asset Class 14 Analyzing Volatility with Implied Volatility 16 What Does Implied Volatility Reveal? 16 Making Trading Decisions Based on the Disparity between Historical and Implied Volatility 17 Appreciating Volatility for All It Is Worth 19 How Volatility Really Works on the Trading Floor 20 Volatility and Uncertainty: Lessons for the Irrational Option Trader 21 Varieties of Option Volatility Trading 23 CHAPTER 3 Working with Volatility to Make Investment Decisions 25 On Predicting the Future 25 Starting with Historical Volatility 27 Implied Volatility 32 Why Do Volatilities Increase as Equities Fall? 35 Implied Versus Historical Volatility 36 Justification for the Disparity between Historical and Implied Volatility 37 CHAPTER 4 Volatility Skew: Smile or Smirk? 39 Considering Some Examples 40 A Primer on Random Walk and Normal Distribution 41 Dealing with the Higher Moments of the Normal Distribution 45 Skew Is High, Skew Is Low. So What? 47 Does a "Flat" or "Steep" Skew Predict the Future? 48 A Fair Warning about Thinking about Skew too Much 49 CHAPTER 5 Fixated on Volatility and the VIX: What Is Volatility, Anyhow? 51 What We (Think) We Know 52 Definitions of VIX 54 Grasping the VIX Index 54 VIX--A (Very) Brief History 55 VIX: Calculation and Interpretation with a Simple Calculator 56 Important Insights on the VIX Index 57 What Does the VIX Tell Us? 58 VIX and Perhaps the Biggest Misnomer of All! 59 PART II: UNDERSTANDING OPTION VOLATILITY AND ITS RELATIONSHIP TO OPTION GREEKS, PERSONAL DECISION MAKING, AND ODDS CREATION 61 CHAPTER 6 Extreme Volatility and Option Delta 63 The Misnomer of Delta and Probability of Exercise 63 Delta Defined 65 The Relationship Between Volatility and Delta 69 Higher Volatility and Delta 70 Lower Volatility and Delta 70 Delta, Time, and Volatility 71 Delta, Position Delta, Volatility, and the Professional Trader 72 CHAPTER 7 Smoke and Mirrors: Managing Gamma through Volatile Markets 75 Gamma and Volatility 78 Managing Positive Gamma during a High-Volatility Environment 79 The Bad News: There's Always More than Meets the Eye 80 Practical Considerations for Managing Long Gamma in a High-Volatility Environment 81 Managing Negative Gamma in a High-Volatility Environment 82 Practical Considerations of Negative Gamma in High Volatility 84 Gamma and Volatility with Respect to Time Structure 85 Summary 86 CHAPTER 8 Price Explosion: Volatility and Option Vega 87 The Relationship between Implied Volatility and Vega 88 Implied Volatility: Price Analogy 90 Option Vega and Time 90 Option Vega and Its Greek Cousins 91 Option Vega Implications 91 Don't Underestimate the Relationship between Volatility and Option Vega 91 Volatility and Vega Insensitivity 93 Important Concepts When Applying Option Vega in a Volatile Marketplace 94 Summary 97 CHAPTER 9 Sand in the Hourglass: Volatility and Option Theta 99 Balancing Time Decay with Volatility: Mistakes Traders Make 101 Volatility and Theta: What Every Investor Needs to Know 106 CHAPTER 10 The Nuances of Volatility: Interpreting the Mix of Academics and the Study of Volatility 109 The Complication Surrounding Vega Risk in an Option Position 110 Implied Volatility Skew1Term Structure5Volatility Surface 111 Implied Volatility Term Structure 114 Did You Know Your Volatility Has Volatility? 115 The Normal Value of Volatility 117 PART III: TEN PROVEN STRATEGIES TO EMPLOY IN UNCERTAIN TIMES 119 CHAPTER 11 Preparing for Trading Using Volatility Strategies 121 T
(0 Comentarios)
