Options Mastery Advanced Strategies for Profitable Trading

By Leonardo Guiliani

Looking to learn about options trading and develop profitable strategies? Look no further than this comprehensive guide to options and option trading strategies. Whether you're a beginner or an experienced trader, this book provides a wealth of knowledge and practical advice to help you succeed in the world of options trading. With clear explanations, real-world examples, and expert insights, you'll learn everything you need to know to make informed decisions and maximize your profits. Don't miss out on this invaluable resource for options traders – order now and start trading with confidence!

• Language: English
• Publisher: Leonardo Guiliani
• Release date: Aug 20, 2023
• ISBN: 9798223843634

Book preview

By Leonardo Guiliani

Dear Reader,

Welcome to the world of options trading! I am thrilled to introduce you to this comprehensive guide on options and option trading strategies.

As someone who has been involved in the financial industry for many years, I can attest to the power and potential of options trading. However, I also understand that it can be a complex and intimidating field, especially for beginners. That's why I believe this book is an invaluable resource for anyone looking to learn about options and how to trade them effectively.

This book covers everything from the basics of options trading to more advanced strategies and techniques. The authors have done an excellent job of breaking down complex concepts and explaining them in a way that is accessible and easy to understand. The scientific writing style used throughout the book provides a strong foundation of knowledge and ensures that you are getting accurate and up-to-date information.

Whether you are a novice trader or have some experience under your belt, this book has something for everyone. The chapters on charting tools, options analysis software, and trading communities and forums provide valuable insights into the tools and resources available to help you make informed decisions. And the chapters on position sizing, stop loss orders, hedging techniques, and managing losing trades offer practical advice on risk management and maximizing profits.

I strongly encourage you to read this book and apply its principles to your options trading endeavors. It is a well-researched and well-written guide that will provide you with the knowledge and skills necessary to succeed in the world of options trading. I am confident that you will find it both informative and enjoyable to read.

Best of luck in your options trading journey!

Sincerely,

Leonardo Guiliani

Introduction to Options Trading

1.1 What are options?

1.2 Types of options

1.3 Key terms and concepts

1.4 Options trading process

1.5 Why trade options?

Basic Options Strategies

2.1 Call options

2.2 Put options

2.3 Long and short positions

2.4 Covered calls

2.5 Protective puts

Options Pricing and Volatility

3.1 Options pricing models

3.2 The Greeks

3.3 Implied volatility

3.4 Historical volatility

3.5 Volatility strategies

Advanced Options Strategies

4.1 Spreads

4.2 Straddles and strangles

4.3 Iron condors

4.4 Butterfly spreads

4.5 Ratio spreads

Options Trading Psychology

5.1 Emotions and biases

5.2 Risk management

5.3 Position sizing

5.4 Discipline and patience

5.5 Staying focused

Option Chains and Order Entry

6.1 Option chains

6.2 Reading option quotes

6.3 Entering orders

6.4 Choosing expiration dates

6.5 Choosing strike prices

Options Strategies for Income Generation

7.1 Writing covered calls

7.2 Writing cash-secured puts

7.3 Iron condors for income

7.4 Calendar spreads for income

7.5 Dividend capture strategies

Options Strategies for Directional Trading

8.1 Long calls and puts

8.2 Bull call spreads

8.3 Bear put spreads

8.4 Diagonal spreads

8.5 LEAPS strategies

Options Strategies for Volatility Trading

9.1 Long straddles and strangles

9.2 Short straddles and strangles

9.3 Iron butterflies

9.4 Backspreads

9.5 Reverse iron butterflies

Options Strategies for Hedging

10.1 Protective puts

10.2 Collars

10.3 Synthetic stock positions

10.4 Married puts

10.5 Portfolio insurance strategies

Options Trading Tools and Resources

11.1 Options trading platforms

11.2 Charting tools

11.3 Options analysis software

11.4 News and research sources

11.5 Trading communities and forums

Options Trading Risk Management

12.1 Position sizing

12.2 Stop-loss orders

12.3 Hedging techniques

12.4 Managing losing trades

12.5 Trading plans and journals

Options Trading Case Studies

13.1 Case study #1: Hedging a stock portfolio with options

13.2 Case study #2: Generating income with covered calls

13.3 Case study #3: Trading volatility with straddles and strangles

13.4 Case study #4: Directional trading with bull call spreads

13.5 Case study #5: Using options to protect against downside risk

Options Trading Mistakes to Avoid

14.1 Overtrading

14.2 Failing to use risk management strategies

14.3 Ignoring market trends and news

14.4 Not having a trading plan

14.5 Letting emotions drive trading decisions

Advanced Options Trading Topics

15.1 Options on futures

15.2 Binary options

15.3 Exotic options

15.4 Options on ETFs

15.5 International options trading

Chapter 1.1 What are Options?

Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price and time. The underlying asset can be anything that is traded in the financial markets, such as stocks, currencies, commodities, or indices. The buyer of an option pays a premium to the seller, who is obligated to sell or buy the underlying asset if the buyer decides to exercise the option.

Options have been traded for centuries, with evidence of options trading dating back to ancient Greece. However, the modern options market began to develop in the 1970s, with the creation of standardized options contracts traded on organized exchanges. Today, options trading is a multi-billion dollar industry, with options available on a wide range of underlying assets and traded in numerous financial markets around the world.

Options can be used for a variety of purposes, such as hedging, speculation, income generation, or risk management. They can also be used in combination with other financial instruments, such as stocks, bonds, or futures, to create complex trading strategies with different risk and reward profiles.

One of the key characteristics of options is their flexibility. Options come in two types: calls and puts. A call option gives the holder the right to buy the underlying asset at a predetermined price, known as the strike price, while a put option gives the holder the right to sell the underlying asset at the strike price. Options can be bought or sold at any time before their expiration date, which can range from days to years, depending on the contract.

Another important characteristic of options is their leverage. Options allow traders to control a large amount of underlying assets with a relatively small amount of capital, which can lead to significant profits or losses, depending on the market conditions and the trading strategy.

Understanding the mechanics and applications of options is essential for anyone interested in trading them. In the following chapters, we will explore the different types of options, their pricing and valuation, the basic and advanced trading strategies, and the common mistakes to avoid when trading options.

References:

Hull, J. C. (2018). Options, futures, and other derivatives. Pearson Education Limited.

Natenberg, S. (2015). Option volatility and pricing: Advanced trading strategies and techniques. McGraw-Hill Education.

Bakshi, G., Cao, C., & Chen, Z. (1997). Empirical performance of alternative option pricing models. The Journal of Finance, 52(5), 2003-2049.

Chapter 1.2 Types of Options

There are two main types of options: call options and put options. A call option gives the buyer the right, but not the obligation, to buy the underlying asset at a predetermined price, known as the strike price, on or before the expiration date of the option. A put option gives the buyer the right, but not the obligation, to sell the underlying asset at the strike price on or before the expiration date of the option.

Call options are used by traders who believe that the price of the underlying asset will increase in the future, while put options are used by traders who believe that the price of the underlying asset will decrease. Both types of options can be bought or sold, and the seller of an option is obligated to sell or buy the underlying asset if the buyer decides to exercise the option.

In addition to these basic types of options, there are several variations and combinations that can be used for different trading purposes. Some of the most common types of options are:

American options: These options can be exercised at any time before the expiration date of the option. This gives the buyer more flexibility and potentially higher profits, but also increases the price of the option.

European options: These options can only be exercised on the expiration date of the option. This makes them less flexible than American options, but also cheaper and easier to value.

Asian options: These options have a payoff that is based on the average price of the underlying asset over a certain period of time, rather than the price at the expiration date of the option. This can be useful for traders who want to minimize the