Index

American-type option, 11

Bar chart, 34

Barrier option, 11–12

Bear call spread strategy, 68–71, 83–84

Bear call spread profit and loss diagram, 84

Bear candlestick, 36, 37

Bearish option strategies, 65

bear call spread strategy, 68–71

bear put spread strategy, 71–74

long put options, 65–68

Bear put spread strategy, 71–74

Binary options, 12

charts, 33–38

stochastic oscillator, 44–45

trading strategies, 38

EMA 5-minute strategy using 6-, 20-, and 50-period EMAs, 41–42

exponential moving average (EMA), 39

rainbow exponential moving average (EMA), 39–41

relative strength index (RSI) 80/20 strategy, 42–44

simple moving average (SMA), 38–39

Black-filled candlestick, 38

Black Scholes Pricing Model, 3–4

Bond options, 20

Boundary method, 14–15

Boundary USD/CHF trade, 15

Broken wing butterfly spread strategy, 80–82

Bull call spread option strategy, 59–62

Bull candlestick, 36

Bullish strategies, 57–59

bull call spread option, 59–62

bull put spread option, 62–64

Bull put spread profit and loss diagram, 85

Bull put spread option trading strategy, 59–62, 84–86

Butterfly spread strategies, 75

broken wing, 80–82

long call, 76

long put, 77–79

short call, 79

short put, 79

Buying and selling stocks, 2

Call options

definition, 1

profit-and-loss diagrams, 5–7

Call/put method, 12

Candlestick chart, 35, 37

bear candlestick, 36, 37

black-filled candlestick, 38

bull candlestick, 36

white-filled candle, 38

Charts, 33–38

Chicago Board of Options Exchange, 2

Chicago Board of Trade, 3

Commodity options, 20

Currency options, 20

Currency options, foreign, 25

long call, 25–26

long put, 26–27

short call, 26

short put, 27–28

Currency trading, 2

Derivatives. See Options

Digital options. See Binary options

Electronic trading, 4

Equity options. See Stock options

European options, 11

Exchange-traded options, 19–20

Expiration date, 1

Expiry, 89

Exponential moving average (EMA)

5-minute strategy using 6-, 20-, and 50-period EMAs, 41–42

rainbow strategy, 39–41

Facebook, 21–23

Foreign currency options, 20, 25–28

long call, 25–26

long put, 26–27

short call, 26

short put, 27–28

Forex, 20

Fundamental indicators, 59, 68

Hedging, 87–89

High/low GBP/USD trade, 13

High/low method, 12–13

Index options, 20, 28–30

Internet, 4

Investors trading index options, 20

Iron condor spread strategies, 83

bear call spread, 83–84

bull put spread, 84–85

long iron condor, 86

short iron condor, 85–86

Ladder method, 15–17

Line chart, 33, 34

Long call butterfly spread strategy, 76

Long iron condor, 86

Long iron condor profit and loss diagram, 86

Long put butterfly spread strategy, 77–79

Long put option strategy, 65–68

Long straddle option strategy, 47–49

Long straddle profit-and-loss diagrams, 48

Long strangle option strategy, 51–53

Long strangle profit-and-loss diagrams, 52

Moving averages, 38. See also specific moving average strategies

One touch/no touch trading method, 13–14

Online trading, 4

Options. See also specific options

American, 11

barrier, 11–12

binary, 12

definition, 1

European, 11

exchange-traded options, 19–20

history of, 1–4

over-the-counter options, 21–31

types, 11–17

Options Clearing Corporation, 3

Over-the-counter options

foreign currency options, 25–28

index options, 28–30

stock options, 21–24

types, 21

Profit and loss diagram

call options, 5–7

bear call spread, 84

bull put spread, 85

long iron condor, 86

long straddle, 48

long strangle, 52

put options, 7–9

short iron condor, 85

short straddle, 50

short strangle, 54

Put and Calls Brokers and Dealers Association, 3

Put options. See also specific strategies

definition, 1

profit-and-loss diagrams, 7–9

writer, 27

Rainbow exponential moving average (EMA) strategy, 39–41

Relative strength index (RSI) 80/20 strategy, 42–44

Sage, Russell, 3

Securities and Exchange Commission, 3

Short call butterfly spread strategy, 79

Short iron condor profit and loss diagram, 85

Short put butterfly spread strategy, 79

Short straddle option strategy, 49–51

Short straddle profit-and-loss diagrams, 50

Short strangle option strategy, 54–56

Short strangle profit-and-loss diagrams, 54

Simple moving average (SMA), 38–39

Stochastic oscillator, 44–45

Stock market indexes, 20

Stock options, 20–24

Straddle option strategy

long, 47–49

short, 49–51

Strangle option strategy

long, 51–53

short, 54–56

Strike price, 1

Technical analysis, 33, 34

Trading

exchange-traded options (See Exchange-traded options) strategies, 38

EMA 5-minute strategy using 6-, 20-, and 50-period EMAs, 41–42

exponential moving average (EMA), 39

rainbow exponential moving average (EMA), 39–41

relative strength index (RSI) 80/20 strategy, 42–44

simple moving average (SMA), 38–39

Trigger, 11

Tulip bulb mania, 2

Up/down method, 12

Vanilla options

bearish option strategies, 65

bear call spread strategy, 68–71

bear put spread strategy, 71–74

long put options, 65–68

bullish strategies, 57–59

bull call spread option, 59–62

bull put spread option, 62–64

butterfly spread strategies, 75

broken wing, 80–82

long call, 76

long put, 77–79

short call, 79

short put, 79

hedging using, 87–89

iron condor spread strategies, 83

bear call spread, 83–84

bull put spread, 84–86

long iron condor, 86

straddle option strategy

long, 47–49

short, 49–51

strangle option strategy

long, 51–53

short, 54–56

White-filled candle, 38