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Option Trader's Hedge Fund, The: A Business Framework for Trading Equity and Index Options

By Dennis A. Chen, Mark Sebastian

Published by FT Press

Published Date: May 24, 2012

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In this book, a hedge fund manager and an option trading coach show you how to earn steady, reliable income selling options by managing your option trades and running your option portfolio as a real business with consistent, steady returns. Packed with real-world examples, the authors show you how to manage your own “one man” hedge fund and make consistent profits from selling options by applying the basic framework and fundamental business model and principles of an “insurance company”. This framework helps you to apply your option trading strategy to a solid, predictable, business model with consistent returns. For someone who has some knowledge of trading options and wants to become a consistent income earner. The authors provide a complete “operations manual” for setting up your business. Gain pearls of wisdom from both a professional options trader and coach, and from a hedge fund manager focused on managing an options based portfolio.

Table of Contents

Introduction    1
Part I: The Framework
Chapter 1: The Insurance Business     5
Chapter 2: Trade Selection     19
Chapter 3: Risk Management     31
Chapter 4: Trade Execution     43
Chapter 5: The Trading Plan     55
Chapter 6: Trading Infrastructure     63
Chapter 7: Learning Processes     73
Part II: Implementing the Business
Chapter 8: Understanding Volatility     81
Chapter 9: Most Used Strategies     89
Chapter 10: Operating the Business: Putting Together TOMIC 1.0 from A to Z     121
Part III: Lessons from the Trading Floor
Chapter 11: Lessons from the Trading Floor on Volatility     131
Chapter 12: Lessons from the Trading Floor on Risk Management     145
Chapter 13: Lessons from the Trading Floor on Trading and Execution     155
Chapter 14: Lessons from the Trading Floor on the Other Greeks     173
Chapter 15: The Beginning     191
Appendix A: Recommended Reading     195
Appendix B: Strategy Learning Sequence     199
Appendix C:     201
Appendix D: Kite Spread     203
Index     205