We use cookies to provide essential features and services. By using our website you agree to our use of cookies .

×

Warehouse Stock Clearance Sale

Grab a bargain today!


The Intelligent Option Investor
By

Rating

Product Description
Product Details

Table of Contents

Acknowledgments xiIntroduction xiiiPart I: Options for the Intelligent Investor Chapter 1: Option Fundamentals 3Characteristics and History 4
Directionality 9
Flexibility 20
Chapter 2: The Black-Scholes-Merton Model 29The BSM’s Main Job is to Predict Stock Prices 30
The BSM is Lousy at Its Main Job 39
Chapter 3: The Intelligent Investor’s Guide to Option Pricing 49How Option Prices are Determined 50
Time Value versus Intrinsic Value 56
How Changing Market Conditions Affect Option Prices 59
Part II: A Sound Intellectual Framework for Assessing Value Chapter 4: The Golden Rule of Valuation 77The Value of an Asset 78
Cash Flows Generated on Behalf of Owners 80
The Company’s Economic Life 82
Time Value of Money: Summing Up Cash Flows Over Time 87
Chapter 5: The Four Drivers of Value 91Bird’s Eye View of the Valuation Process 91
A Detailed Look at the Drivers of Value 97
Chapter 6: Understanding and Overcoming Investing Pitfalls 113Behavioral Biases 114
Structural Impediments 131
Part III: Intelligent Option Investing Chapter 7: Finding Mispriced Options 143Making Sense of Option Quotes 144
Delta: The Most Useful of the Greeks 151
Comparing an Intelligent Valuation Range with a BSM Range 155
Chapter 8: Understanding and Managing Leverage 163Investment Leverage 164
Simple Ways of Measuring Option Investment Leverage 169
Understanding Leverage’s Effects on a Portfolio 174
Managing Leverage 183
Chapter 9: Gaining Exposure 187Long Call 189
Long Put 201
Strangle 205
Straddle 208
Chapter 10: Accepting Exposure 211Short Put 212
Short Call (Call Spread) 220
Short Straddle/Short Strangle 230
Chapter 11: Mixing Exposure 233Long Diagonal 235
Short Diagonal 238
Covered Call 240
Protective Puts 248
Collar 258
Chapter 12: Risk and the Intelligent Option Investor 263Market Risk 263
Valuation Risk 265
Intelligent Option Investing 267
Appendix A: Choose Your Battles Wisely 269Where the BSM Works Best 269
Where the BSM Works Worst 273
Appendix B: The Many Faces of Leverage 282Operational Leverage 282
Financial Leverage 285
Appendix C: P ut-Call Parity 287Dividend Arbitrage and Put-Call Parity 288
Notes 295Index 305

About the Author

Erik Kobayashi-Solomon is the founder and principal of IOI, LLC and the Director of Research for YCharts, Inc. Previously, he served as Morningstar's Market Strategist and as co-editor of the Morningstar OptionInvestor newsletter. In addition to publishing well-received sector and stock-specific reports for YCharts' individual and institutional clients, Erik has been sought out by a wide range of institutional investors--from the World Bank to value-oriented hedge funds--for his expertise in corporate valuation, option investing strategies, and risk control issues.

Ask a Question About this Product More...
 
This title is unavailable for purchase as none of our regular suppliers have stock available. If you are the publisher, author or distributor for this item, please visit this link.

Back to top