Volatility Trading Strategies

Abstract

Sheldon Natenberg is one of the most sought after speakers on the topic of option trading and volatility strategies. This book takes Sheldon's non-technical, carefully crafted presentation style and applies it to a book-one that you'll study and carry around for years as your personal consultant. Learn about the most vital concepts that define options trading, concepts you'll need to analyze and trade with confidence. In this volume, Sheldon explains the difference between historical volatility, future volatility, and implied volatility. He provides real inspiration and wisdom gleaned. Cover; Contents; Title; Copyright; Meet Sheldon Natenberg; Chapter 1: The Most Important Tool for any Options Trader; Your Goal Is Not to Cut off Your Hand; Black-Scholes: The Grandfather of Pricing Models; The Fundamental Elements of Any Pricing Model; Chapter 2: Probability and Its Role in Valuing Options; Overcoming the Subjective Nature of the Process; The Problem with Probabilities; You Can Agree to Disagree; Expanding the Realm of Probabilities; What Constitutes a Normal Distribution?; How Distribution Assumptions Affect Option Pricing; The Symmetrical Nature of Distribution Curves. Chapter 3: Using Standard Deviation to Assess Levels of VolatilityStandard Deviation; Volatility Numbers Are Fluid; Adjusting Volatility for Differing Time Periods; Examples of a Standard Deviation Conversion; Verifying Volatility; Chapter 4: Making Your Pricing Model More Accurate; Some Essential Adjustments to Your Volatility Input; Key Differences in a Lognormal Distribution; When the Market Disagrees With the Models; Chapter 5: The Four Types of Volatility and How to Evaluate Them; The First Interpretation: Future Volatility; The Second Interpretation: Historical Volatility. The Third Interpretation: Forecast VolatilityThe Fourth Interpretation: Implied Volatility; Checking the Inputs: How to Correct Your Valuation; Simplifying the Volatility Assessment; Chapter 6: Volatility Trading Strategies; The Fundamentals of Volatility Trading; Further Adjustments Required; A Black-Scholes Anecdote; The Risks of Volatility Trading; Are You Naked-Or Are You Covered?; A Visual Picture of Volatility; Using Volatility to Improve Your Predictions; A Quick Look at Volatility Cones; The Two Primary Models for Predicting Volatility; Margin Requirements and Commissions. Chapter 7: Theoretical Models vs the Real WorldSummary; Appendix A: Option Fundamentals; Appendix B: A Basic Look at Black-Scholes; Appendix C: Calendar Spread; Appendix D: Greeks of Option Valuation; Appendix E: Key Terms; Index; Trading Resource Guide; Recommended Reading.