Options, Plain & Simple is a straightforward and practical guide to the fundamentals of options. It is plain because it includes only what is essential to basic understanding. It is simple because it presents options in conventional terms, with a minimum of jargon. It is thorough; it is not simplistic. This book will benefit all newcomers to options, introducing them to the instruments and markets, and giving them the competence and confidence to trade successfully. It opens up new opportunities for private investors who previously felt intimidated by the mystique and jargon surrounding options, and saves brokers much of the time they spend explaining options fundamentals to their clients. This is not rocket science. Options are explained in terms of real-life, every-day circumstances and accessible language. Clarity and practical application are paramount; unnecessary theory and jargon conspicuous by their absence. Veteran US trader Lenny Jordan takes the secrets of options to the every-day investor. Options, Plain & Simple will enable all investors to use options wisely, by fully understanding the instruments, their risks and successful applications. Options, Plain & Simple introduces readers to the three key options markets -- stocks, bonds and commodities, the various types of options contracts - from straight options to strangles and butterflies - and covers the fundamentals of options pricing and trading. It outlines effective options strategies for beginners and intermediate investors, and offers unique insights into the behaviour of options under a wide variety of market conditions. Illustrative stories, trading scenarios and worked examples will lead investors through the concepts with one eye always on the realities of the market. "A key step in learning to use options is to spend plenty of time dwelling on a couple of dozen "building block" concepts that are both mathematical and strategic. This book offers the neophyte the opportunity to take his mind out for some exercise over almost all of tech option topics that should matter to him, and to check his progress through relevant questions and answers." Martin P. O'Connell, O'Connell & Piper Associates, Chicago. The Author Lenny Jordan currently trades options at the London International Financial Futures and Options Exchange. Formerly he traded at the Chicago Board of Trade. He gives options training seminars, and is a risk consultant.
Preface
About the author
About this book
Introduction
PART 1: Options fundamentals
1. Options in everyday life
2. The basics of calls
3. The basics of puts
4. Pricing and behaviour
5. Volatility and pricing models
6. The Greeks and risk assessment: delta
7. Gamma and theta
8. Vega
PART 2: Options spreads
Introduction
9. Call spreads and put spreads, or one by one directional spreads
10. One by two directional spreads
11. Combos and hybrid spreads for market direction
12. Volatility spreads
13. Iron butterflies and iron condors: combining straddles and strangles for reduced risk
14. Butterflies and condors; combining call spreads and put spreads
15. The covered write, the calendar spread and the diagonal spread
PART 3: Thinking about options
16. The interaction of the Greeks
17. Options performance based on cost
18. Options talk 1
19. Options talk 2: trouble shooting and common problems
20. Volatility skews
PART 4: Basic non-essentials
21. Futures, synthetics and put-call parity
22. Conversions, reversals, boxes and option arbitrage
23. Conclusion
Glossary
Suggestions for further reading
Index of underlying contracts
Index
About Lenny Jordan
Lenny Jordan currently trades options at the London International Financial Futures and Options Exchange. Formerly he traded at the Chicago Board of Trade. He gives options training seminars, and is a risk consultant.
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