Option Trading: Pricing and Volatility Strategies and Techniques - Hardcover

by Euan Sinclair (Author)

An A to Z options trading guide for the new millennium and the new economy

Written by professional trader and quantitative analyst Euan Sinclair, Option Trading is a comprehensive guide to this discipline covering everything from historical background, contract types, and market structure to volatility measurement, forecasting, and hedging techniques.

This comprehensive guide presents the detail and practical information that professional option traders need, whether they're using options to hedge, manage money, arbitrage, or engage in structured finance deals. It contains information essential to anyone in this field, including option pricing and price forecasting, the Greeks, implied volatility, volatility measurement and forecasting, and specific option strategies.

• Explains how to break down a typical position, and repair positions
• Other titles by Sinclair: Volatility Trading
• Addresses the various concerns of the professional options trader

Option trading will continue to be an important part of the financial landscape. This book will show you how to make the most of these profitable products, no matter what the market does.

Front Jacket

Successful trading, in general, is difficult and options specifically can be compli-cated. In most cases, those who do well have an ability to focus on good processes and let the results take care of themselves.

Nobody is more familiar with this situation than professional trader and quantitative analyst Euan Sinclair. In Option Trading, he's broken down the process into the parts you need to thrive--an understanding of market structure, knowledge of the instruments you trade, a way to capture an edge, and a methodology for managing risk.

Written with the serious trader in mind, this comprehensive guide opens by exploring options, both historically and conceptually, and then uses the no-arbitrage principle to introduce option pricing--examining both static arbitrage relationships and the dynamic hedging approach. With this critical background in hand, the largest and most substantial part of the book addresses how to actually trade options.

Along the way, you'll gain an in-depth understanding of:

• The various option strategies that can be implemented, from puts and calls to strangles, straddles, and butterflies
• How to measure and forecast realized volatility, the nature and behavior of implied volatility, and what it takes to successfully trade the two
• The concept of expected value, the general idea of hedging, and the importance of trade sizing
• The strategies behind market making
• The essential aspects of risk management in option trading
• And much more

Option trading is an important part of the financial landscape. This book will show you how to make the most of these profitable products, no matter what the market does.

Back Jacket

Successful trading, in general, is difficult and options specifically can be complicated. In most cases, those who do well have an ability to focus on good processes and let the results take care of themselves.

Nobody is more familiar with this situation than professional trader and quantitative analyst Euan Sinclair. In Option Trading, he's broken down the process into the parts you need to thrive--an understanding of market structure, knowledge of the instruments you trade, a way to capture an edge, and a methodology for managing risk.

Written with the serious trader in mind, this comprehensive guide opens by exploring options, both historically and conceptually, and then uses the no-arbitrage principle to introduce option pricing--examining both static arbitrage relationships and the dynamic hedging approach. With this critical background in hand, the largest and most substantial part of the book addresses how to actually trade options.

Along the way, you'll gain an in-depth understanding of:

• The various option strategies that can be implemented, from puts and calls to strangles, straddles, and butterflies
• How to measure and forecast realized volatility, the nature and behavior of implied volatility, and what it takes to successfully trade the two
• The concept of expected value, the general idea of hedging, and the importance of trade sizing
• The strategies behind market making
• The essential aspects of risk management in option trading
• And much more

Option trading is an important part of the financial landscape. This book will show you how to make the most of these profitable products, no matter what the market does.

Author Biography

EUAN SINCLAIR is an option trader with fifteen years of professional trading experience. He specializes in the design and implementation of quantitative trading strategies. Sinclair is currently a proprietary option trader for Bluefin Trading, where he trades based on quantitative models of his own design. He holds a PhD in theoretical physics from the University of Bristol. Sinclair is also the author of the Wiley title Volatility Trading.