77: Example configuration FinViz 346
Figure 78: Results of the filter criteria at FinViz 348
Figure 79: Setup of a Ratio-Spread 351
Figure 80: P/L-Diagram Put-Ratio-Spread (1xΔ50 Long-Put; 2x Δ30 Short-Put) 352
Figure 81: Profit zone put-ratio spread (buy 1x Δ50 long put, sell 2x Δ30 short put) 353
Figure 82: Example Naked-Short-Put 363
Figure 83: Example Long Call Vertical 365
Figure 84: Example Short Put Vertical 367
Figure 85: Example Long Put Vertical 369
Figure 86: Example Naked Short Call 373
Figure 87: Example Short Call Vertical 375
Figure 88: Example Broken Wing Butterfly 378
Figure 89: Example Butterfly 381
Figure 90: Example Iron Condor 385
Figure 91: Example Iron Fly 388
Figure 92: Example Jade Lizard 390
Figure 93: Example Straddle 392
Figure 94: Example Strangle 394
List of abbreviations
A.M. Ante meridiem
AMC After Market Closing
ATM At-the-Money
Bln. Billion
BMO Before Market Opening
BTC Buying to Open
BTO Buying to Close
DTE Days till experation
ETC Exchange Traded Commodity
ETF Exchange Traded Fund
ETN Exchange Traded Note
USD USD
ITM In-the-Money
IV Implied Volatility
IVR Implied Volatility Rank
Mio. Million
OCC Options Clearing Corporation
OTM Out-of-the-Money
P.M. Post meridiem
P/L Profit/Loss
POP Potential of Profit
STC Selling to Close
STO Selling to Open
SQRT Squareroot
USD United States Dollar
Foreword
A good book always begins with an honest preface. So first of all I would like to thank you for holding my first book in your hands and I hope that you will be satisfied with it in the end. What made me write this book you might ask? I myself have been trading in different approaches to the financial markets for years and, like almost everyone else, had to teach myself everything from the ground up. I didn't have a mentor and I know how frustrating it can be to have to go on this journey alone. There are many offers within the financial world that promise you great wealth or want to make you a professional in a short time. Let's not kid ourselves, 99% of it is complete nonsense and brings you nothing, except empty bags, than you had before. Books are often outdated or simply no longer up to date and seminaires are expensive pleasures that don't tell you a secret in the end.
In 2018 I therefore decided to write this book and to dedicate it to an area that seems to have been somewhat neglected in the German-speaking world. Here in Germany, hardly anyone talks about trading options. I am well aware that "the German" has no great interest in the capital markets, especially not in equities. Often it stays with the savings book - that will have to do. So if the interest in equities is already so low, one can guess that the interest in options must be much lower. Wrongly, I think. Options are a great financial product which, if used correctly, can achieve a clear excess return over simple stock shares. In Germany it is a niche issue. The literature that has appeared in Germany has unfortunately become somewhat outdated, sometimes simply bad and often completely overpriced, or simply not practicable or suitable for the small private investor. Exactly this aspect I would like to try to change.
The intention is therefore to generate as much interest as possible in this subject area and to get more people interested in options.
What is this book and what it isn't? Will this book make you a millionaire? Certainly not, it takes a lot more than just reading a few lines. There has to be so much honesty. Nevertheless, it should help you to provide a well-founded and wide-ranging insight into the world of options. It is essential that you always remain curious and interested. A single book cannot teach everything there is to teach and to know about this specific topic. Not even 1.000 pages would be enough. However, care has been taken to ensure that everything is addressed that you need in order to set up your first trades and to obtain your first experiences of success. However, it is still a non-fiction “entertaining” book, so you will probably not be able to read it like a novel in one piece.
In my opinion, a friendly relationship paired with a bit of humour and numerous examples is more suitable for learning than hours of frontal teaching. I try to live up to this claim here. I, too, was a bloody beginner and know your situation, so you will not be addressed from above, but directly and personally. The ultimate goal must be for you to understand what you have read and to be able to apply it! No one will be helped if you end up depressed and peppering this book in the corner instead of seriously dealing with the future.
It is very difficult to construct such a book conceptually suitable for everyone, since the knowledge to be conveyed seems to be almost infinite. However, the attempt was made to create a logical structure that would first teach you the basics and then later deal with real examples and strategies that you could put into practice. Once again, it is a reference book, so there will be parts that will bore you or perhaps even overwhelm you in the beginning (keyword "the Greeks"). Don't worry about it, it's all the same to everyone, no master has fallen from heaven yet.
The first chapters are theory-based and are intended to give you an understanding of the basic concepts of option trading. The greatest care is taken to convey this knowledge in a simple and practical way, although there are some topics that you simply have to go through. At the end of each section you will receive the most important information in a nutshell after the small hint "Remember". As soon as the strategies and trading approaches are discussed later, you can fall back on the cheat sheets and checklists towards the end of the book, print them out and stick them next to your screen.
Now I wish you lots of fun and good luck with your first steps into the world of options.
Happy Trading,
Stefan.
