101 Option Trading Secrets

Preparing to Play

1 The Secret Advantages of Option Trading 

2 Education, Education, Education 

3 Play It on Paper 

4 Stick a Toe in the Water

5 Do Your Homework

 

The Prediction Game

6 Those Who Use Crystal Balls Eat Chipped Glass 

7 Beware of Lady Luck 

8 Regression Back to the Mean 

9 Beware of Gurus 

10 Secret Prediction Methods 

11 Maverick Investing 

12 Tracks in the Charts 

13 Use the Laws of Supply and Demand 

14 Sell in May and Go Away 

15 The 60% Rule 

16 Predicting Stock Tops and Market Bottoms 

 

Option Buying

17 Get the Biggest Bang for Your Buck

18 Beware of Inertia

19 Cheap Is Not Always Cheap!

20 Swing for the Fences

21 Let It Ride! 

22 Don’t Let Profits Slip Away 

23 Beat the Clock 

24 Avoid an Option’s Last Month 

25 The Secret of Scaling 

26 Beware of Delusions of Grandeur 

27 Don’t Plunge! 

28 Analyze Your Option Position 

29 The Secret of Profit Boxes 

30 The Straddle Secret 

31 Be Patient 

32 The Option Buyer’s Secret Weapon Shock and Awe

33 The Stock Advantage 

34 The Put Advantage 

35 Diversify 

36 The Quick and the Dead 

37 The Secret of Portfolio Insurance 

38 The Second Secret to Portfolio Insurance 

39 A Long Shot Secret 

 

Option Writing

40 Take the Bet Instead of Making the Bet 

41 The Secret Advantage of Option Writing 

42 The Secret of Quick Profits 

43 Play It Naked 

44 Probability—the First Secret for Option Writers 

45 Time—the Second Secret for Option Writers 

46 Get Out of the Hot Seat! 

47 Expiration Writing 

48 Defense, Defense, Defense 

49 When to Use Covered Call Writing 

50 The Hidden Risk of Covered Call Writing 

51 Covered Call Writing Strategies 

52 Use Naked Put Writing to Buy Stock 

53 Naked Put Writing Can Create a Win-Win Strategy 

 

Option Analysis

54 Know the True Value Advantage 

55 Option Analysis Can Be Easy 

56 The Key to Options Analysis 

57 Implied Volatility—An Option Analysis Shortcut 

58 Keep Your Eyes on the Delta 

59 Use Probability Analysis 

60 The Secret Weapon of Option Analysis 

61 A Tool for Your Arsenal 

62 Searching for the Best Plays 

63 Situational Analysis 179

64 Unraveling the Mysteries of Baysian Analysis 181

65 Gone in 60 Minutes 187

66 Your Crystal Ball to the Future or

Risk-Reward Analysis Using AI 189

Section 6: Spreading

67 The Spread Advantage 195

68 The Secret Costs of Option Spreads Beware of Slippage 197

69 Beware of Alligator Spreads 201

70 Avoid Delta Neutral Strategies 203

71 Avoid Repair Strategies 205

72 How to Reduce the Cost of Option Buying 207

73 Rules of the Road 209

Section 7: Trading Tactics

74 Go Online! 213

75 The Hidden Cost of Trading 217

76 Act Like a Market-Maker 221

77 Test the Waters—How to Get the Best Price 223

78 You Can Buy the World for 1/8 225

79 How to Enter Spread Positions 227

80 Secret Spreading Tactics 229

81 Don’t Tip Your Hand—Beware of Size 231

Section 8: Trading Tips

82 The Top Secret War Room 235

83 Don’t Try to Catch a Falling Knife! 239

84 Only Play with Fun Money 241

85 Know When to Fold Them 243

86 The Secret of Sunk Cost 245

87 Always Use Stop-Losses, and Don’t Look Back 247

88 Check Your Track Record 251

89 The Dragon That You See Is Not the Dragon

That Will Burn You 253

CONTENTS

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Section 9: Trading Resources

90 Treasures on the Information Highway 257

91 Avoid Analysis Paralysis 259

92 How to Use Option Advisory Services 261

93 The 5 P’s 263

94 The Magic Pyramid 267

Section 10: Power Plays

95 “Thar Is Gold in Them Thar HIlls” 271

96 Rules of the Road for Option Buying 273

97 Aggressive Writing with Limited Risk 275

98 Rules of the Road for Index Credit Spreads 279

99 The Ratio Hedge 281

100 The Diagonal Spread 283

101 The Ultimate Power Play: The Secret Surrogate 287

Conclusion 291

Section 11: Tutorial

The Listed Option 295

The Listed Call and Put 296

Parts of the Whole, the Listed Option 296

The Option Exchange 298

The Price of an Option 299

Intrinsic Value 299

Time Value 300

Volatility 301

CONTENTS

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Liquidity 302

Option Writers 303

Two Types of Option Writers 304

The How-to to Option Writing 306

Exercise Defined 307

Spread Designer 307

The Debit Spread 307

The Credit Spread 308

Index 311