Time is Money: The Power of Non-Directional Options Trading

Description

The new book, Time Is Money, comes from Kerry Given, the author of No Hype Options Trading, and he discusses the concept of non-directional trading. If you have some experience with options trading, you have probably heard the term, delta neutral trading. This is one of the buzzword phrases that has been used in marketing options trading education, trading alert services, and describing the strategies of hedge funds. Delta neutral does sound exotic - is this the trading secret I have been searching for? But we will see clearly in this book that there is no "secret" to options trading. Non-directional trading is a lesser known term and may be considered a subset of delta neutral trading. This book does an excellent job of distinguishing delta neutral trading from non-directional trading. These are not synonyms. The trader may use a delta neutral strategy because he is predicting a sideways price pattern or price movement within a modest sized channel.  The delta neutral trade is just one choice among several options strategies. If the trader is bullish, he selects a bullish trade; if he is bearish, he selects a bearish trade. And if his prediction is for a sideways price movement, he selects a delta neutral trade. This trader is using a delta neutral trading strategy as a directional trade; it is based on the trader's prediction for the future price movement of the underlying stock or market index. The directional trader has a specific interest with particular knowledge about an individual stock or index and a prediction for its future value. Dr. Given distinguishes non-directional trading from delta neutral trading in one critically important way. If one is trading non-directionally, he develops a series of rules for entry, exit and adjustment of a delta neutral trading strategy and then enters and manages the position dictated by those rules month after month. He has made no prediction of the future; he just manages the position each day based on the market's price move that day. The trader is no longer predicting the market's next move tomorrow; the trader is reacting to what the market gives him today. The non-directional trader tries his best not to predict where the market is going tomorrow. Instead, he focuses on where the market is today and the actions his rules dictate. He follows the rules. This may seem like a fine distinction in semantics, but give Time Is Money a try. Focus on what the market is doing today and what your rules dictate. Throw away your crystal ball. About the Author -  Kerry W. Given, Ph.D., is the founder of Parkwood Capital, LLC, a business that consists of stock and options coaching, a weekly newsletter, and two trading advisory services. Dr. Given is a co-founder of G&L Capital Management, LLC and manages the Theta Income Fund. Kerry speaks frequently at trading conferences and on behalf of several option brokerage firms. Kerry is the author of No Hype Options Trading, published by John Wiley and Sons. Dr. Given earned his B.S. from the University of Florida and his Ph.D. from the University of Minnesota. TIME IS MONEY Time is Money To Charlotte, my best friend, Acknowledgments Introduction CHAPTER ONE WHAT IS NON-DIRECTIONAL TRADING? Where Is My Risk? The Opportunistic Model The Insurance Model Non-Directional Trading Summary CHAPTER TWO WHY DO PROBABILITIES MATTER? Who Was Gauss? How Does It Work In Real Life? Calculating Probabilities Using Probabilities In Options Trading Put The Probabilities On Your Side Is Trading Options Gambling? A Zero-Sum Game? Summary CHAPTER THREE THE SECRET OF OPTIONS TRADING The Lowly Stop Loss The 200% Rule Adjusting the Position Why Do We Have To Adjust So Often? Money Management Summary CHAPTER FOUR IT’S GREEK TO ME What Are the Greeks? Individual Option Greeks vs. Position Greeks Which Trade Is Best In This Market? Time Decay: Your Profit Machine Managing the Trade With the Greeks Summary CHAPTER FIVE THE ROLE OF VOLATILITY What Are All These Different Volatilities? Implied Volatility As A Measure Of Risk Implied Volatility Skews Implied Volatility and Options Pricing Implied Volatility at the Beginning of the Trade Watch Your Vega! Summary CHAPTER SIX CAN WE USE WEEKLY OPTIONS NON-DIRECTIONALLY? How Do Weekly Options Work? What Do The Greeks Tell Us? What Else Is Different? Possible Strategies With Weekly Options What Can Go Wrong? Summary CHAPTER SEVEN THE UBIQUITOUS VERTICAL SPREAD Building the Vertical Spread Effects of Implied Volatility Early Exercise Expiration and Exercise Margin Requirements Selection Of Strike Prices Summary CHAPTER EIGHT DOES YOUR HEAD GET IN THE WAY? The Two Deadly Emotions How Did You Succeed In Life? The Two-Headed Monster Summary CHAPTER NINE CALENDAR SPREADS Vega Risk Volatility Skews The Search For Candidates Trade Management and Adjustment Early Exercise OTM Calendar Spreads Summary CHAPTER TEN DOUBLE CALENDAR SPREADS Single Or Double? The Search For Candidates Determining The Optimal Strike Prices Trade Management and Adjustment Summary CHAPTER ELEVEN BUTTERFLY SPREADS Constructing The Butterfly Spread Iron Butterfly Spreads Margin Requirements Trade Management And Adjustment Back Testing The Butterfly Trading Systems Closing Butterfly Spreads CHAPTER TWELVE DOUBLE DIAGONALS Building The Double Diagonal Spread Trade Management And Adjustment Back Testing the Double Diagonal Double Diagonals vs. Double Calendars Summary CHAPTER THIRTEEN CONDORS AND IRON CONDORS Building The Condor Spread Building The Iron Condor Spread The Debit Condor vs. The Iron Condor My Condor May Not Be Your Condor The Best Iron Condor Strategy Stocks, Indexes or ETFs? Condor Safety Nets Trade Management And Adjustment Volatility And The Iron Condor Back Testing The Iron Condor Trading Systems Summary CHAPTER FOURTEEN THE BEST NON-DIRECTIONAL TRADE The Myth Of the Best Strategy Consider the Current Market Where Is Volatility? How Does The Trade Make Money? Compare and Contrast The Role of Diversification Summary CHAPTER FIFTEEN WHERE DOES IT GO WRONG? Market Crashes Trending Markets My Mistakes Summary CHAPTER SIXTEEN YOU CAN DO THIS How Does a Market Maker Make Money? Does the Retail Trader Have a Chance? Milking the Cows Summary