Option Spread Trading - Hardcover

by Russell Rhoads (Author)

A practical guide to unlocking the power of option spreads

When dealing with option spreads your looking to purchase one option in conjunction with the sale of another option. If managed properly, these spreads can provide experienced investors with the potential for large returns without undertaking a great deal of risk.

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.

• All manner of spreads are covered, from calendar and horizontal spreads to vertical and diagonal spreads
• Highlights how you can monitor and adjust an existing spread position and provides tips on how to exit a spread trade
• Includes exercises and examples to test and reinforce your knowledge of the concepts presented

Option spread trading has become increasingly popular with active traders and investors. Gain a better understanding of this powerful approach with Option Spread Trading as your guide.

Front Jacket

The options industry has experienced incredible growth in recent years. With multiple exchanges now vying for orders from the public, the speed of execution has increased while the cost of trading options has decreased. This has leveled the playing field to the point where individual traders can not only compete in the options arena, but also capture consistent profits.

Nobody understands this better than author Russell Rhoads--an instructor for the Options Institute at the CBOE--who has helped thousands of people successfully incorporate various options strategies into their everyday trading endeavors.

Now, with Option Spread Trading, he shares his extensive experience in this field and reveals what it takes to put the power of option spreads to work for you. Before getting into a detailed discussions of spread trades, this reliable resource opens with a quick overview of essential option knowledge, lays out the mechanics of putting on very basic positions involving two trading instruments, explores different approaches to creating similar payoffs, and covers the "Greeks."

From there, you'll be introduced to a variety of spread strategies, with each chapter focusing on a specific one, and discover how to choose and use the best strategies for certain situations.

• STRADDLES

• STRANGLES

• BULL AND BEAR SPREADS

• BUTTERFLY SPREADS

• CONDOR SPREADS

• RATIO SPREADS

• BACKSPREADS

• CALENDAR SPREADS

• DIAGONAL SPREADS

Rounding out this comprehensive guide to option spread trading are some specialized chapters that address the concept of Delta-neutral trading--with an example of how market makers basically use isolating price risk when providing liquidity to the market place--and the issues involved in executing a spread trade.

Designed in a modular format with each chapter laid out in a similar fashion, including examples of how each spread would be constructed and key levels to focus on, Option Spread Trading is a flexible guide that will help you get the most out of every option you trade.

Back Jacket

Option Spread TRADING

The options industry has experienced incredible growth in recent years. With multiple exchanges now vying for orders from the public, the speed of execution has increased while the cost of trading options has decreased. This has leveled the playing field to the point where individual traders can not only compete in the options arena, but also capture consistent profits.

Nobody understands this better than author Russell Rhoads--an instructor for the Options Institute at the CBOE--who has helped thousands of people successfully incorporate various options strategies into their everyday trading endeavors.

Now, with Option Spread Trading, he shares his extensive experience in this field and reveals what it takes to put the power of option spreads to work for you. Before getting into a detailed discussion of spread trades, this reliable resource opens with a quick overview of essential option knowledge, lays out the mechanics of putting on very basic positions involving two trading instruments, explores different approaches to creating similar payoffs, and covers the "Greeks."

From there, you'll be introduced to a variety of spread strategies, with each chapter focusing on a specific one, and discover how to choose and use the best strategies for certain situations.

• STRADDLES
• STRANGLES
• BULL AND BEAR SPREADS
• BUTTERFLY SPREADS
• CONDOR SPREADS
• RATIO SPREADS
• BACKSPREADS
• CALENDAR SPREADS
• DIAGONAL SPREADS

Rounding out this comprehensive guide to option spread trading are some specialized chapters that address the concept of Delta-neutral trading--with an example of how market makers basically use isolating price risk when providing liquidity to the market place--and the issues involved in executing a spread trade.

Designed in a modular format with each chapter laid out in a similar fashion, including examples of how each spread would be constructed and key levels to focus on, Option Spread Trading is a flexible guide that will help you get the most out of every option you trade.

Author Biography

RUSSELL RHOADS is an instructor for the Options Institute at the Chicago Board Options Exchange. He conducts about ninety classes a year and, in addition, conducts webinars on behalf of the CBOE and a variety of brokerage firms. Rhoads's twenty-year trading career included positions at a variety of trading firms and hedge funds. His background includes trading and analysis, and he is author of Candlestick Charting For Dummies. Rhoads graduated the University of Memphis with a MS in finance and has a master's certificate in financial engineering from the Illinois Institute of Technology.