Essential Option Strategies (eBook)

JJ Kinahan is Chief Strategist and Managing Director for TD Ameritrade. A thirty-year trading veteran and a Forbes contributor, he began his career as a Chicago Board Options Exchange (CBOE) market maker trading in the S&P 100 (OEX) and S&P 500 (SPX) pits. After leaving the floor, he joined thinkorswim, later purchased by TD Ameritrade, where he led initiatives on trading tools and education for retail clients.

Introduction

Acknowledgments

About the Author

Part I: Getting Started in Investing

Chapter 1: The Opening Bell

Probabilities

Getting Started

Research

Data

Charts

Commissions and Fees

Virtual Trading Platforms

Chapter 2: First Days of Trading

Brief History of Stock Market Averages

Key Market Indexes Today

The Volatility Index

Futures

The Bond Market

Fed Watch

Economic Indicators

Earnings

Find Your Niche

Chapter 3: Know the Underlying

Where Do Options Trade?

Stock Talk

Exchange-Traded Funds

Short Selling

On the Margin

Chapter 4: Avoiding Mistakes

Position Size

Volume and Liquidity

Order Entry Techniques

Understand Risk

Part II: The Options Market

Chapter 5: Options Basics

Stock Options

Option Value

Exercise and Assignment

Volume and Open Interest

Index Options

Chapter 6: Intro to Call Options

Call Options versus Stock

Risk and Reward of Long Call

Real-World Example

Short Calls

Index Call Options

Chapter 7: Intro to Put Options

Long Puts versus Short Selling

Risk and Reward

Real-World Example

Protective Puts

Index Put Options

Chapter 8: Components of Options Prices

Delta Defined

Strike Price

Time Decay

Implied Volatility

Dividends

Interest Rates

Put-Call Parity

Chapter 9: Probabilities

Probabilities 101

Probability of Profit

Probability of Touching

Example

Delta to Measure Probabilities

Part III: Strategies and Positions

Chapter 10: Covered Calls

The Covered Call

Example

Chapter 11: Cash-Secured Puts

Short Puts

Example

Chapter 12: Long Vertical Spreads

Bull Call Spread

Example

Bear Put Spread

Example

Chapter 13: Short Vertical Spreads

Short (Bull) Put Spread

Example

Short (Bear) Call Spread

Example

Chapter 14: Calendar Spreads

Call Calendar Spread

Example

Put Calendar Spread

Example

Chapter 15: Butterfly Spreads

Butterfly Spread

Example

Iron Butterfly Spread

Example

Chapter 16: Condor Spreads

Condor Spread

Example

Iron Condor Spread

Example

Chapter 17: Final Bell

Risk Management

Option Orders

Using Options to Reduce Capital Commitment

Rolling with Spread Trades

Investing and Social Media

Final Thoughts

Appendix A: The Greeks

Appendix B: Strategy Recap

Appendix C: Charts and Volatility Studies

Glossary

Index