Thomsett Options Installment Strategies

Long-Term Spreads for Profiting from Time Decay
1. Auflage 2018
ISBN: 978-3-319-99864-0
Verlag: Springer International Publishing
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 196 Seiten

Reihe: Progress in Mathematics

An 'installment strategy' in its most basic form, combines two options, one long-term position and one short-term. This strategy is designed as a conservative, no-cost method to either eliminate risk for future trading when stock is owned; or to fix the price for a future purchase of the underlying security.Portfolio managers and experienced individual traders face a chronic problem - risk versus time. This goes beyond the well-known time decay of options and expands to the ever-present market risk to an underlying security. How do you execute a successful, conservative strategy and eliminate or reduce market risk? In this book, a range of effective and creative strategies set out a conservative hedging system.  This involves the combination of long-term long positions offset by short-term short positions in various configurations. Options Installment Strategies presents variations on the well-known calendar spread and demonstrates how specific strategies work well in short-term swings and even during extended periods of consolidation.

Michael C. Thomsett has been writing for a living since 1978 and has published more than 90 books. These include 12 options books. His best-selling Getting Started in Options has been published in ten editions and sold more than 300,000 copies. The 10th edition has been renamed Options (The Essential Guide for Getting Started in Derivatives Trading).  He also has developed and presented options webinars, and operates a financial education website, Money Craft. Thomsett is a frequent speaker at trade shows and investment conventions. He blogs on Seeking Alpha, Options Money Maker, Steady Options and other social media.

Autoren/Hrsg.

Thomsett, Michael C.

Inhaltsverzeichnis

1;Preface: Why a Contingent Method?;5
2;Contents;9
3;List of Figures;13
4;List of Tables;15
5;1: Chart-Based Trade Timing;16
5.1;The Key to Profitable Trades;17
5.2;Advantageous Price Levels;19
5.3;Price Patterns;21
5.4;Candlesticks (Eastern);23
5.5;Western Price Indicators;25
5.6;Non-price Signals;26
5.7;Strong Fundamental Trends;27
6;2: Proximity and Risk;30
6.1;Proximity and Moneyness;32
6.2;Proximity to Expiration;33
6.3;Proximity of Price to Resistance or Support;34
6.4;Strongest Reversal Proximity;37
6.5;Proximity in Consolidation Trends;39
6.6;Risks in Every Strategy;41
6.7;Collateral Requirements;42
6.8;Options and Market Risk;43
7;3: Picking the Right Stock;45
7.1;Fundamental Risk;46
7.2;The Effect of Fundamental Trends on Options Risk;47
7.3;Contingent Purchase and Stock Selection;49
7.4;Contingent Sales as Risk Hedges of Stock;51
7.5;Dividend Yield and Trends;53
7.6;Debt to Total Capitalization Ratio and Trend;54
7.7;P/E Annual Ranges;58
7.8;Revenue and Earnings Trends;59
8;4: Timing with Well-Selected Technical Signals;62
8.1;Entry and Exit Timing;63
8.2;Resistance and Support;65
8.3;Bollinger Bands;66
8.4;T-Line;67
8.5;Gaps and Tops or Bottoms;69
8.6;Rounded Tops or Bottoms and Island Reversals;70
8.7;Candlestick Reversal;72
8.8;Candlestick Continuation;73
8.9;Volume Indicators;74
8.10;Momentum Oscillators;75
8.11;Moving Averages;77
9;5: Long-Term Market Risk Elimination;79
9.1;The Nature of Underlying Risk;80
9.2;The Risk Hedge with Long Puts;83
9.3;The Trade: Long-Term Long Put and Short-Term Short Positions;84
9.4;Calculating the Point of Risk Elimination;87
9.5;Possible Outcomes;89
10;6: Long-Term Contingent Purchase;92
10.1;Locking in the Future Price;92
10.2;The Risk Hedge for Future Purchase;95
10.3;Calculating the Point of Risk Elimination;97
10.4;Possible Outcomes;99
11;7: Short Options and Levels of Risk;104
11.1;Unavoidable Risks;104
11.1.1;Risk Hedge Exercise;105
11.1.2;Contingent Purchase Exercise;106
11.2;Covered Calls for Risk Reduction;109
11.3;Uncovered Puts for the Same Risk Profile;111
11.4;Uncovered Calls and Varying Risk Levels;112
11.5;Picking Calls or Puts Based on Price Proximity;113
11.6;Exploiting Time Decay;115
12;8: Alternative Offsets Beyond Short Calls or Short Puts;117
12.1;Synthetic Stock;117
12.2;Vertical and Diagonal Spreads;121
12.3;Straddles and Strangles;125
12.4;Iron Butterfly;128
12.5;Closing the Long-Term Option at a Profit;130
13;9: Combining the Short Offset Alternatives;132
13.1;Current Price Proximity;132
13.1.1;Proximity of Strike to Resistance or Support;133
13.1.2;Proximity of Price to Strike;134
13.1.3;Proximity of Reversal Signals to Resistance and Support;135
13.2;Historical Volatility;137
13.3;Combining the Alternatives;139
13.4;Multiple Increments and Combinations;145
14;10: Expanding the Strategies;147
14.1;Rolling Techniques;148
14.2;Long Collars;149
14.3;Long-Term Long Straddles and Strangles;152
14.4;Short-Term Short Straddles, Strangles and Spreads;155
14.5;Covered Straddles and Strangles;156
14.6;Straps and Strips;158
14.6.1;Long Strap;158
14.6.2;Long Strip;159
14.7;Multiple Option Contracts;161
15;11: Managing Potential Losses;163
15.1;Short Positions at Risk;164
15.1.1;Covered Calls;164
15.1.2;Uncovered Calls;165
15.1.3;Uncovered Puts;165
15.2;The Advantage of Time Decay;166
15.3;Reducing Risk Exposure: Moneyness and Timing;167
15.4;Avoiding Ex-dividend Periods;168
15.5;Avoiding Earnings Week;169
15.6;Short-Term Expiration Advantages;173
16;12: Recovery Strategies;174
16.1;Protective and Responsive Loss Offsets;175
16.1.1;Protective Offset;175
16.1.2;Responsive Offset;176
16.2;Selective Rolling;176
16.3;Closing and Taking Losses;178
16.4;Entering New Positions with Higher Risks;179
16.5;Expanding Exposed Spread Positions;179
17;13: The Flexibility of Options Hedging;181
17.1;The Hedging and Leverage Advantage;181
17.2;Installment Variations Based on Changing Conditions;183
17.3;Adjusting to Sudden Price Movement;184
17.4;Reducing Risks with Long-Term Hedging;186
18;Bibliography;188
19;Index;191