Options in Volatile Markets: Managing Volatility and Protecting Against Catastrophic Risk

Overview

Praise for Options FOR Volatile Markets, Second Edition

"Once again, McMillan and Lehman have created new and insightful updates into the world of derivatives trading. Every time you think you've mastered the game, these two industry titans prove you wrong. It's uncanny. In fact, let me put it this way: If you think you know options markets, think again."
Richard Bensignor, President and Chief Strategist at Bensignor Strategies, Inc.; Editor of New Thinking in Technical ...

See more details below
Other sellers (Hardcover)
  • All (13) from $33.26   
  • New (11) from $33.26   
  • Used (2) from $40.31   
Options for Volatile Markets: Managing Volatility and Protecting Against Catastrophic Risk

Available on NOOK devices and apps  
  • NOOK Devices
  • NOOK HD/HD+ Tablet
  • NOOK
  • NOOK Color
  • NOOK Tablet
  • Tablet/Phone
  • NOOK for Windows 8 Tablet
  • NOOK for iOS
  • NOOK for Android
  • NOOK Kids for iPad
  • PC/Mac
  • NOOK for Windows 8
  • NOOK for PC
  • NOOK for Mac
  • NOOK Study
  • NOOK for Web

Want a NOOK? Explore Now

NOOK Book (eBook)
$34.49
BN.com price
(Save 42%)$60.00 List Price

Overview

Praise for Options FOR Volatile Markets, Second Edition

"Once again, McMillan and Lehman have created new and insightful updates into the world of derivatives trading. Every time you think you've mastered the game, these two industry titans prove you wrong. It's uncanny. In fact, let me put it this way: If you think you know options markets, think again."
Richard Bensignor, President and Chief Strategist at Bensignor Strategies, Inc.; Editor of New Thinking in Technical Analysis

"Highly recommended for serious investors aiming to protect their portfolios from the next 'black swan' event. It's not a question of 'if' but 'when.' Be prepared with the tactics in this book."
Donato A. Montanaro, Jr., Chairman and CEO, TradeKing

"Options for Volatile Markets provides the reader with time-tested option strategies for capital appreciation, income generation, and limiting losses. As discovered during the financial hurricane of 2008, asset diversification is not enough. Properly implemented, option strategies can be the difference between financial success and failure during volatile times."
Kenneth G. Winans, CMT, MBA, President and Founder, Winans International; award-winning author and Forbes.com columnist

"The 'new normal' post-2008 world involves more than just lower returns, it comes with an overhang of serious risk to boot. This book provides clear strategies to both boost returns and protect against 'fat-tail' risks that can destroy capital."
Stephen Savage, Managing Partner, Litman/Gregory Asset Management

"Successful investment management over time is not driven by how much one makes, but rather by how much one consistently does not lose. The best investors and traders of which I know focus first on risk management and secondly on profit maximization. After witnessing the financial market volatility of the last decade, absolute returns and consistency of those returns should be a key objective of institutional as well as retail investors going forward. Lehman and McMillan provide a roadmap of creative, intelligent, and purposeful options strategies for achieving exactly this."
Brian Pretti, CFA, CFP, Chief Investment Officer, Mechanics Bank

Read More Show Less

Product Details

  • ISBN-13: 9781118022269
  • Publisher: Wiley
  • Publication date: 8/9/2011
  • Series: Bloomberg Financial Series , #143
  • Edition number: 2
  • Pages: 224
  • Sales rank: 813,494
  • Product dimensions: 6.20 (w) x 9.10 (h) x 0.90 (d)

Meet the Author

RICHARD LEHMAN is the founderof RHL Capital, a registered investment advisor, and a part-time instructor of behavioral finance and options at UC Berkeley Extension. He is also the author of Far From Random, and publishes an investment newsletter called the Channelist. Lehman's financial career spans more than thirty years in product management, marketing, sales, and investment management beginning with an eleven-year stint on Wall Street with E.F. Hutton & Co., Thomson McKinnon Inc., and the New York Stock Exchange.

LAWRENCE G. McMILLAN is the founder and President of McMillan Analysis Corporation. He authors the Daily Volume Alerts, a unique daily service that selects short-term stock trades by looking for unusual increases in equity option volume. McMillan manages option-oriented accounts for individual investors and also publishes the Option Strategist, a derivative products newsletter covering equity, index, and futures options. McMillan's web site, www.optionstrategist.com, twice received a "Best of the Web" award from Forbes magazine. He is the coauthor, with Richard Lehman, of the first edition of this book and the author of McMillan on Options (Wiley) and Options as a Strategic Investment.

Read More Show Less

Table of Contents

Preface xi

INTRODUCTION

The “New Normal” in Equity Investing 1

CHAPTER 1

Option Basics 7

What Are Options? 7

Exercise and Assignment 14

Positions 17

How Options Are Traded 19

Options in Your Account 22

CHAPTER 2

Option Pricing and Valuation 25

Option Premium 25

Theoretical Value 27

Time Value 28

Volatility 31

Interest Rates 32

Dividends 32

Calls versus Puts 33

Option Skews and Anomalies 34

CHAPTER 3

The Basics of Covered Call Writing 37

Requirements for “Valid” Covered Writes 38

Risk/Reward of a Covered Write 39

Calculating Potential Returns 46

Major Factors Affecting Call-Writing Returns 48

Covered Writing as an Ongoing Strategy 54

Summing Up Covered Writing 57

CHAPTER 4

Implementing Covered Call Writing 59

Follow-Up Actions 59

Behavioral Issues 69

Differing Approaches 70

Selecting Calls to Write 77

Risks 80

Basic Tax Rules for Options 81

Summing Up Implementation 84

CHAPTER 5

Advanced Call-Writing Techniques 87

Writing Calls on “Hot” Stocks 88

Tax Deferral Strategies 89

Covered Writing on Margin 90

Covered Writing against Securities Other Than Stock 93

Partial Writing, Mixed Writing, and Ratio Writing 98

Put Writing 103

Expiration Games 106

Option-Stock Arbitrage 108

CHAPTER 6

Basic Put Hedging 111

Put Hedge Basics 111

Advantages 115

Disadvantages 116

Behavioral Implications 123

Put Hedge versus Covered Call 127

Hedging against Catastrophic Risk 129

CHAPTER 7

Advanced Hedging Strategies 131

Put Hedge Follow-Ups 131

Using Put Spreads to Hedge 137

Collars 145

Conclusions on Protective Option Strategies 151

CHAPTER 8

Options on ETFs 153

ETFs in a Nutshell 154

ETF Options 158

Covered Call Writing on ETFs 159

Our Put Hedge and Collar Study on SPY 162

Appendix: Partial List of ETFs with Listed Options 165

CHAPTER 9

Volatility and Volatility Derivatives 171

What Is Volatility? 171

Using VIX as a Market Indicator 173

Volatility Futures 179

Variance Futures 181

The Behavior of VIX Futures 183

VIX Options 191

VIX Option Strategies 199

The Future 204

Acknowledgments 205

About the Authors 206

Index 207

Read More Show Less

Customer Reviews

Be the first to write a review
( 0 )
Rating Distribution

5 Star

(0)

4 Star

(0)

3 Star

(0)

2 Star

(0)

1 Star

(0)

Your Rating:

Your Name: Create a Pen Name or

Barnes & Noble.com Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & Noble.com that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & Noble.com does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at BN.com or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation

Reminder:

  • - By submitting a review, you grant to Barnes & Noble.com and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Noble.com Terms of Use.
  • - Barnes & Noble.com reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & Noble.com also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on BN.com. It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

 
Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously

    If you find inappropriate content, please report it to Barnes & Noble
    Why is this product inappropriate?
    Comments (optional)