Options on Futures, Workbook: Step-by-Step Exercises and Tests to Help You Master Options on Futures: New Trading Strategies (Wiley Trading) (Paperback)

by John F. Summa (Author), Jonathan W. Lubow (Author)

Master Options on Futures Trading By Testing Your Knowledge on Key Concepts and Strategies

John Summa and Jonathan Lubow provide an invaluable opportunity to explore your understanding of Options on Futures: New Trading Strategies in their companion Options on Futures Workbook.

The workbook chapters correspond directly to the chapters in Options on Futures: New Trading Strategies. The authors begin by summarizing the key concepts of each chapter in Options on Futures, including a brief glossary of terms. They then present a series of review questions–true/false and multiple choice–followed by supplemental exercises containing simulated trades and market conditions. Answer keys are listed in the back of the book, with helpful, extended explanations.

Topics covered include:

• Understanding S&P 500 futures
• Mechanics of S&P futures options
• The long and short of an S&P credit spread
• Essential characteristics of commodity futures and options
• Synthetic calls, naked writing, and ratio spreads and writes
• Timing the S&P 500 using put/call ratio analysis

Get a solid feel for the options on futures markets with the Options on Futures Workbook. Also included are detailed explanations of what it means to be an options writer, how to determine if options are overvalued, and when is the best time to sell options with the highest probability of success.

From the Inside Flap
OPTIONS ON FUTURES:
NEW TRADING STRATEGIES

Many of todays investors and traders have acquired a basic understanding of stock options. With the publication of Options on Futures: New Trading Strategies, authors John Summa and Jonathan Lubow show how easy it is for investors and traders to make the transition to commodity options and options on other futures markets. Written as a how-to guide to understanding options on futures terms, characteristics, and strategies, this book also presents a look at some of the authors favorite strategies in action, under both favorable and unfavorable market conditions. Readers will benefit by having a chance to look over the shoulders of these two experienced options traders as they set up their trades and make adjustments in the heat of battle.

Summa and Lubow present what they call a net selling approach to trading options. The authors persuasively make the case that option buyers (typically inexperienced traders) remain at the mercy of time-value decay, while option sellers have a built-in trading edge because they can profit from the decay of time value and the sale of overvalued options. Option sellers do not totally depend on a markets direction in order to profit, a key advantage to selling options often overlooked by novice traders. The authors compile historical data from the Chicago Mercantile Exchange, which supports their claim that option sellers (also known as option writers) do better than buyers. The data presented by the authors show that the majority of options–most notably over 800f all S&P futures options–expire worthless. It is the sellers, argue the authors, who are laughing all the way to the bank.

Options on Futures shows you how to incorporate this sellers advantage into a variety of trading strategies, including:

• S&P 500 credit spreads
• Commodity options credit spreads
• Options on futures ratio writes
• Commodity options ratio spreads
• Synthetic call strategies
• Naked calls and puts

Each strategy is explained with hypothetical examples and the reconstruction of actual trades. Investors and traders of all stripes who have any interest in taking advantage of the profit potential of options markets will find Options on Futures full of insights about options and how best to trade them. --This text refers to the Hardcover edition.