Index

Ask price, 5

At the money (ATM), 6, 10

ATM. See At the money

Balanced butterflies, 77

Bear put vertical, 26

Bearish, 12

Bias, 12

Bid price, 5

Bid-to-ask, 5

Body, 77

Breakout, 6, 43, 79, 156, 163

Broken wing butterflies, 77

Broken wing long call butterfly, 92–93

unbalanced, 100–101

Broken wing long put butterfly, 96–97

Broken wing short call butterfly, 94–95

Broken wing short put butterfly, 98–99

Brokerage account, 3, 11, 19

Bull call, 21–22

Bull put, 7, 23

Bullish, 12

Calendar bull call, 27

Calendar bull put, 28

Calendar straddle, 32–33

Call ratio spread, 64–65

Cash-covered put. See Short put

Commissions, 11

Condor, 44–45

Contract expiration date, 12

Covered call, 19–20

Covered short strangle, 52–53

Days till expiration (DTE), 14

Defined-risk option strategies, 12

Delta, 5, 12

Delta-neutral option strategy, 162, 164

Delta-neutral trade, 157

Diagonal bull call, 29–30

Diagonal bull put, 31

Diagonal call ratio spread, 68–69

Diagonal put ratio spread, 70–71

Double butterfly, 110–112

Downtrending price. See Bearish

DTE. See Days till expiration

Equity collar, 72–73

ETFs. See Exchange-traded funds

Exchange fees, 11

Exchange-traded funds (ETFs), 3

Expiration date, 6, 10, 12

Extrinsic value, 5, 120

Finance, 130, 142, 144, 145 401K, 2

Gamma, 6

risk, 77, 81, 112

Hedge, 73–74, 124, 147, 149, 151, 154, 159

Horizontal bull call diagonal, 24–25

Implied volatility (IV percent/Rank), 6, 12–13

In The money (ITM), 6, 10

Income, 1–2, 12, 14, 17, 118, 150, 154, 164

Index option, 110

Individual retirement account (IRA), 2

Intrinsic value, 5, 120

Investment, 1, 12, 15, 117

IRA. See Individual retirement account

Iron butterfly, 113–114

Iron condor, 36–37

ITM. See In The money

Jade lizard, 38–39

LEAPS. See Long-Term Equity Anticipation Securities

Liquidity, 5, 7, 11

Long box, 137–138

Long call, 15–16

Long call butterfly

balanced, 76–77

unbalanced, 84–85

Long call ladder, 129–130

Long call LEAPS, 117–118

Long call synthetic straddle, 157–158

Long guts strangle, 54–55

Long put, 18

Long put butterfly

balanced, 80–81

unbalanced, 88–89

Long put ladder, 133–134

Long put LEAPS, 119–120

Long put synthetic straddle, 161–162

Long straddle, 58–59

Long strangle, 50–51

Long-Term Equity Anticipation Securities (LEAPS), 6, 117–120

MACD. See Moving average convergence divergence

Mark value, 5

Market, 2, 74, 85, 93, 95, 101

Maturity date. See Contract expiration date

Momentum studies, 10

Moving average convergence divergence (MACD), 5

Naked short call. See Uncovered short call

Neutral, bias, 12

Neutral calendar call straddle, 34–35

The Only Options Trading Book You’ll Ever Need, 2, 13

Open Interest, 7

Option chain

call half of, 4

put half of, 4

values, 4–7

Option contract, 6–8, 11–13, 77

Option Greeks, 4

Delta, 5

Gamma, 6

Theta, 6

Vega, 6

Option premium, 3

Option strategies, 12–13. See also Specific strategies

Option trading

option chain values, 4–7

reasons for, 1–2

risk profile, 7–10

rules, 10–12

strategies, 12–13. See also Specific strategies

Order bars, 7–8

OTM. See Out of the money

Out of the money (OTM), 6, 10

Oversold/overbought studies, 10

Premium value, 11. See also Mark value

Price charts, 12

Probability, 9–10

Profit/loss (P/L), 8–9,
11–12, 156

Protective call, 74–75

Put backspread, 121–122

Put ratio spread, 66–67

Ratio call write, 123–124

Ratio put write, 125–126

Relative strength index (RSI), 5

Reverse iron butterfly, 115–116

Reverse iron condor, 42–43

Reward, 12

management. See Trade management

Rho, 4–5

Risk, 12

management, 3, 11–12, 75. See also Trade management

Risk graph. See Risk profile

Risk profile, 7–10

Rolling down, 3

Rolling out, 3, 29

Rolling up, 3

RSI. See Relative strength index

Short box, 139–140

Short call, 14

Short call butterfly

balanced, 78–79

unbalanced, 86–87

Short call ladder, 131–132

Short call synthetic straddle,
159–160

Short condor, 46–47

Short position, 79, 83, 87, 109

Short put, 17

Short put butterfly

balanced, 82–83

unbalanced, 90–91

Short put ladder, 135–136

Short put synthetic straddle, 163–164

Short straddle, 56–57

Short strangle, 48–49

Slippage, 5

Spreads, 12

Strap, 60–61

Strike price, 4–7, 10–12

Strip, 62–63

Synthetic long call, 147–148

Synthetic long put, 149–150

Synthetic long stock, 141–142

Synthetic long stock combo,
143–144

Synthetic short call, 151–152

Synthetic short put, 153–154

Synthetic short stock, 145–146

split strikes, 155–156

Theta, 6

Time, 10

Trade management, 47, 79, 83, 85, 93, 95, 101, 103, 105

Trading. See Option trading

Trading volume, 5, 8, 11

Traditional butterflies, 77

Twisted sister, 40–41

2-step long call butterfly, 102–103

2-step long put butterfly, 106–107

2-step short call butterfly, 104–105

2-step short put butterfly, 108–109

Unbalanced broken wing butterflies, 77

Unbalanced butterflies, 77

Uncovered short call, 14

Uptrending price. See Bullish

Variable ratio call write, 127–128

Vega, 6

Vertical spread, 37, 39, 103, 107–109

Volatility, 3, 6, 10

Watch list, 3

Wings, 77

Witch’s hat/tent, 77, 89, 101