George Jabbour, Philip Budwick – The Option Trader Handbook. Strategies and Trade Adjustments

Strategies, tools, and solutions for minimizing risk and volatility in option trading

An intermediate level trading book, The Option Trader Handbook, Second Edition provides serious traders with strategies for managing and adjusting their market positions. This Second Edition features new material on implied volatility; Delta and Theta, and how these measures can be used to make better trading decisions. The book presents the art of making trade adjustments in a logical sequence, starting with long and short stock positions; moving on to basic put and call positions; and finally discussing option spreads and combinations.

• Covers different types of underlying positions and discusses all the possible adjustments that can be made to that position
• Offers important insights into more complex option spreads and combinations
• A timely book for today’s volatile markets

Intended for both stock and option traders, this book will help you improve your overall trading skills and performance.

Table of Contents

Preface to the First Edition.

Preface to the Second Edition.

CHAPTER 1 Trade and Risk Management.

Introduction.

The Philosophy of Risk.

Truth About Reward.

Risk Management.

Trade Management.

Trading as a Business.

SCORE—The Formula for Trading Success.

CHAPTER 2 Tools of the Trader.

Introduction.

Option Value.

Option Pricing.

Option Greeks and Risk Management.

Time Decay.

Delta/Gamma.

Implied Volatility.

Synthetic Positions.

Basic Strategies.

Basic Spreads and Combinations.

Advanced Spreads.

The Greeks and Spread Trades.

Valuable Derivative Traders Program.

Introduction to Trade Adjustments.

CHAPTER 3 Long Stock.

Introduction.

Protective Put.

Call Replacement.

Sell Covered Calls.

Collars.

Ratio Write.

Short Straddle/Short Strangle.

Call Ratio Spread.

Call Calendar Spread.

CHAPTER 4 Short Stock.

Introduction.

Protective Call—Insurance.

Put Replacement.

Covered Puts.

Short Collars.

Put Ratio Write.

Put Ratio Spread.

CHAPTER 5 Calls and Puts.

Introduction.

Long Call.

Short Call.

Long Put.

Short Put.

CHAPTER 6 Spreads.

Introduction.

Bull Call Spreads/Bear Put Spreads.

Bear Call Spreads/Bull Put Spreads.

Calendar Spreads.

CHAPTER 7 Combinations.

Introduction.

Long Straddle.

Long Strangle.

Short Straddle/Short Strangle.

Index.

Author Information

George M. Jabbour, PhD, is the Director of the Master of Science in Finance program at The George Washington University, as well as a professor of derivatives, financial engineering, and investments. Dr. Jabbour has published various articles in professional financial journals and regularly speaks at conferences in the United States and abroad regarding option pricing models, financial management, and risk management. He is also a managing director of Global Asset Investments, LLC, an asset management and derivatives consulting firm, and CEO of Global Finance Associates Inc., a financial training, consulting, and research company. Dr. Jabbour regularly conducts seminars in option trading and valuation, and is a very active equities and derivatives trader.

Philip H. Budwick, MsF, is the Director of the Capital Markets Trading Room at The George Washington University School of Business and frequently writes articles on option trading strategies and investments. Mr. Budwick is a Managing Director of Global Asset Investments, LLC, an asset management and derivatives consulting firm, and is an active option and stock trader. He has a law degree and a master of science in finance and teaches classes in portfolio management.