Option Spread Trading provides a comprehensive, yet easy-to-understand explanation of option spreads, and shows you how to select the best spread strategy for any given market outlook. Along the way, author Russell Rhoads discusses spread strategies that can be used to profit from a strong up or down directional move in a stock, a stagnant market, or a highly volatile market. He also details how you can harness the leverage of options to create a low-risk position that provides the potential for a big profit.
This book is written in a modular format, where if a reader would like to explore the mechanics of a condor spread they may turn directly to Chapter 10 and quickly explore what is involved in a condor spread. Each chapter is laid out in a similar format, with several tables and usually at least a couple of examples of how each spread would be constructed, along with the key levels to focus on for each spread.
Before delving fully into spread trades there are a few chapters that cover the basics of option trading that will be useful to refer to while reading spread related chapters. Chapter 1 is a quick overview of essential option knowledge that is focused toward those who understand options, but may need a quick refresher before tackling spread trades. Chapter 2 then covers some very basic spread strategies that involve the underlying instrument as part of the spread. This chapter lays out the mechanics of putting on a very basic position that involves two trading instruments. In Chapter 3 the ability to create similar payoffs using two different approaches is explored. The Greeks are introduced in Chapter 1, but covered extensively in Chapter 4.
The following 10 chapters individually cover a variety of spread strategies. As the book moves along, the more complex strategies become. However, the concept behind each trade is basically the same, combining a variety of positions to create a custom payout.
Toward the end of this book, there are a couple of specialized chapters laying out some useful information for all option traders. First, in Chapter 16, the concept of Delta neutral trading is introduced, along with an example of how market makers basically use isolating price risk when providing liquidity to the market place. Finally, Chapter 17 discusses the issues involved in executing a spread trade.
- Essential Option Knowledge
- Spreads Using an Underlying Securit
- Synthetic Positions
- The Greeks
- Bull Spreads
- Bear Spreads
- Butterfly Spreads
- Condor Spreads
- Ratio Spreads
- The Stock Repair Strateg
- Calendar Spreads
- Diagonal Spreads
- Delta Neutral Trading
- Executing a Spread Trading
Option Spread Trading: A Comprehensive Guide to Strategies and Tactics By Russell Rhoads pdf