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Handbook On Options Trading: Make Money Without Predicting the Market Direction

Handbook On Options Trading: Make Money Without Predicting the Market Direction

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Handbook On Options Trading: Make Money Without Predicting the Market Direction

évaluations:
4/5 (5 évaluations)
Longueur:
210 pages
1 heure
Éditeur:
Sortie:
Aug 9, 2013
ISBN:
9789810755904
Format:
Livre

Description

Handbook on Options Trading is the best guide to getting started in trading options. Most traders lose money in trading, and most people try to predict where the market is heading; this is never an easy task. Why not do the opposite? Do it the non-directional way and make money by predicting where the market is not heading.

This book will teach you how options market works with illustrations and real trading examples.
Handbook on Options Trading will cover:

• Introduction to the options market
• Basics of call and put options
• Options buying versus options selling
• Options evaluation and pricing
• Guide to non-directional trading
• Role of psychology to avoid mistakes in trading
• Trading strategies and real case studies

Filled with plenty of examples and case studies, this guide will show traders how options sellers can apply a high probability winning strategy.
Éditeur:
Sortie:
Aug 9, 2013
ISBN:
9789810755904
Format:
Livre

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Handbook On Options Trading - Dave Foo

HANDBOOK ON OPTIONS TRADING

A GUIDE TO NON-DIRECTIONAL TRADING

DAVE FOO

RANK BOOKS

WWW.RANKBOOKS.COM

First Published 2009

Second Edition 2013

Ebook Edition

Published and distributed by:

Rank Books

Blk 1002 Toa Payoh Ind Pk #07-1423 Singapore 319074

Tel: 65-62508180 Fax: 65-62506191

Website: www.rankbooks.com

Email: admin@rankbooks.com

ISBN 978-981-07-5590-4

Copyright © Dave Foo

Cover Design and Typeset: Rank Books

www.rankbooks.com

All Rights Reserved. No part of this publication may be reproduced or copied in any form or by any means – graphic, electronic or mechanical, including photocopying, recording, taping or information retrieval systems – without written permission of Rank Books.

Conditions of Sale: This book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, resold, hired out or otherwise circulated without the publisher’s prior consent in any form of binding or cover other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser.

While every reasonable care is taken to ensure the accuracy of information printed, no responsibility can be accepted for any loss or inconvenience caused by any error or omission. The ideas, suggestions, general principles, examples and other information presented here are for reference and educational purposes only. This book is not in anyway intended to give investment advice or recommendations to trade stock or any other investment. The author or publisher shall have no liability for any loss or expense whatsoever relating to investment decisions made by the reader.

Preface

Having traded for more than a decade and been a full-time trader, on many occasion I have often been asked, What do I do for a living? Although I have some business with some partners going on, my main income does come from trading. Whenever I reply, I trade for a living, I get many different responses. The common response is:

Isn’t that risky?

You must be making a killing since the market has been going on a bull run for the last two months.

Are you affected by the recent market crash?

Which stocks should I buy?

Any insider info?

These are among the questions I have been swamped with whenever the subject of trading is brought up. What every trader is looking for is the secret formula to making money, but nothing could be further than the truth; there is no secret formula, or at least I have not found it yet. Most of the people I talk to have no idea about non-directional trading. In this book I present to you a completely different kind of trading. Open up your mind, think outside the box, and you might have a better chance of surviving in the cruel trading arena.

Most of the people who trade lose money; only a minority really make money and make good money. If we can identify what is common amongst these people, we might be able to increase our odds of winning. Most traders try to predict the market direction. They attend course after course, read book after book, and purchase software after software, with only one objective, which is to know where the market is heading. Once they can identify where the market is heading they will make a lot of money. This is directional trading. It is never easy to predict or know where the market is really heading. The easiest way and most uncommon way is to predict where market is not heading; this will be the core of this book – non-directional trading. Most people lose money in trading doing directional trading, so it’s time for us to think outside the box. Why not be the minority that is doing non-directional trading and try to win with the odds in your favour?

While I can’t promise you will make money using the methodology discussed in this book, I do hope you will find some good ideas and improvise on them for your own trading.

Welcome to the world of Non-Directional Trading. Enjoy!

About The Author

Mr. Dave Foo has trading experience in futures for more than a decade – Simsci and Eminis (S&P, Russell, Nasdaq and Dow Jones). He left his job in end 2003 to pursue a more lucrative full time trading career. Utilizing his expertise and experiences in the futures markets, he has been trading both naked and covered options for more than 10 years with astounding success!

In fact, Dave had proved to time after time on how to generate consistent profits by trading futures options on commoditiy.

www.nondirectionaltrading.com

He has been invited on several occasions to speak on his style of trading by various organization including SmartExpo. You can find more information by going to his website.

He is also the Author of Handbook on Options Trading. And a featured trader in the book title Secrets of Singapore Trading Gurus.

www.NonDirectionalTrading.com

Dedication

Trading is a tough and lonely journey, especially for a full-time trader. This book would never have been completed without my wife who has ridden through all the ups and downs with me all this time while I was struggling with my trading career.

To my dearest wife, Cindy Tay, and my beloved son, Gavin Foo – without them I wouldn’t have made it this far.

To Mr Goh KC of Rank Books – for publishing that helped make this book a success.

To my students who give me valuable feedback – I have learnt more from them than from anyone else.

Acknowledgement

The screen shots that appeared in the book are reproduced with permission from the respective companies as follows:

Figure 3.1A, Figure 3.1B, Figure 5.1, Figure 5.2, Figure 5.3, Figure 5.10, Figure 5.11, Figure 5.12, Figure 5.13, Figure 5.14, Figure 5.15, Figure 5.17, Figure 5.18, Figure 5.19, and Figure 7.1 are reproduced with permission from TS Support, www.tssupport.com. Copyright © 2008. All Rights Reserved.

Figure 7.5, Figure 7.7, Figure 7.9, Figure 7.11, Figure 7.17, Figure 7.19, Figure 7.21, and Figure 7.23 are reproduced with permission from CME Group Inc, www.cme.com. Copyright © 2008. All Rights Reserved.

Figure 1.2, Figure 2.1, Figure 2.2, Figure 2.3, Figure 2.4, Figure 2.5 Figure 2.6, Figure 2.7, Figure 2.8, Figure 2.9, Figure 2.10, Figure 2.11, Figure 2.12, Figure 2.13, Figure 2.14, Figure 2.15, Figure 2.16, Figure 2.17, Figure 2.18, Figure 2.19, Figure 2.20, Figure 2.21, and Figure 2.22, are reproduced with permission from Computer Voice Systems, Inc, www.quickscreentrading.com. Copyright © 2008. All Rights Reserved.

Figure 4.1, Figure 4.2, and Figure 5.4, are reproduced with permission from Ivolatility.com, www.ivolatility.com. Copyright © 2008. All Rights Reserved.

Contents

PREFACE

ACKNOWLEDGEMENT

Chapter 1 – WHAT ARE OPTIONS

What is an Option?

Strike Price

Expiry Date

Types of Options – Call and Put

Call Options

Buying a Call Option

Selling a Call Option

Basic Terms Used in Options Trading

When Do You Buy or Sell a Call Option?

Put Options

Buying a Put Option

Selling a Put Option

ITM, ATM, and OTM for Put Options

When Do You Buy or Sell a Put Option?

What are Intrinsic Value and Extrinsic Value

The Stock Trader Versus The Option Trader in a Bullish Market

The Stock Trader Versus The Option Trader in a Bearish Market

Chapter 2 – HOW TO BUY AND SELL OPTIONS

What do you need to get started?

Choosing a broker

Initial margin and maintenance margin

What is a margin call and what happens when you have a margin call?

Types of Options

Electronics versus Floor Trading

Type of Options Market

Which Options to Trade?

Chapter 3 – YOU ALWAYS WIN IN SELLING OPTIONS

Options Buying versus Options Selling

Options Buyer

Options Seller

Potential Profit versus the Potential for Profit

To Win or Lose, It is Up to You (80% Winning System)

In the Options Game There Are Only Two Bets

Who Are the Players and What Motivates Them?

Trade With an 80%+ Chance of Making Money on Every Trade!

Naked Option – Unlimited Risk???

Put Options Scenario

Call Options Scenario

Limit Up or Limit Down

Stocks Options versus Futures Options

Chapter 4 – OPTIONS PRICING AND EVALUATION

Options Volatility

What Options Volatility Means for You as a Trader…

Time Value and Time Decay

A Simple Way of Calculating the Price of the Options Per Day

Options Greeks

Why Use Greeks?

Delta

Gamma

Vega

Theta

Rho

Chapter 5 – NON-DIRECTIONAL TRADING

What is Non-Directional Trading and Why is Non-Directional Trading a Better Strategy?

Fundamental Analysis, Technical Analysis, or Non-Directional Analysis?

Fundamental Analysis

Technical Analysis

Non-Directional Trading Analysis

Probability Trading

Up Market

Down Market

Chapter 6 – THE WINNING PSYCHOLOGY OF TRADING OPTIONS

Wrong Objective

Impatience

Overtrading

Greed

Fear

Stubbornness and Ego

Margin Control

Diary

Chapter 7 – CALENDAR TRADING

Weekly Options

Calendar System With A Bias Edge

CASE STUDIES

Case One

Case Two: (OPM Trade – Ratio Spread)

Chapter 1

WHAT ARE OPTIONS

What is an Option?

An option is a contract to buy or sell a specific financial product, which is also known as the underlying instrument. For equity options the underlying instrument is a stock or Exchange Traded Fund (ETF). The contract to buy or sell has two components, which are the strike price and an expiry date.

Strike Price

The strike price is the price at which an option holder has the right to buy or sell the underlying asset. A range of strike prices will be available for trading at any time. New strike prices are introduced as the price of the underlying asset moves.

Let’s take for example a stock trading at $95.

Figure

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Avis des lecteurs

  • (2/5)
    Decent book but basically tells you to just sell options. If your looking for info or strategies on buying options not worthwhile.
  • (5/5)
    This was a solid book. Despite typos and some sentences being organized poorly - the information is solid and relevant. The examples are good and well explained. I would say that some of the terminology would be out of the range of a novice, I appreciated it. Recommend!