ultimate trading success. Knowing which option strategy is the right
strategy for a given situation comes with knowledge and experience.
All option strategies are differentiated by their unique risk characteristics.
Some are more sensitive to directional movement of the underlying asset
than others; some are more affected by time passing than others. The exact
exposure positions have to these market influences determines the success
of individual trades and, indeed, the long-term success of the trader who
knows how to exploit these risk characteristics. These option-value
sensitivities can be controlled when a trader understands the option greeks.
Option greeks are metrics used to measure an option’s sensitivity to
influences on its price. This book will provide the reader with an
understanding of these metrics, to help the reader truly master the risk of
uncertainty associated with option trading.
Successful traders strive to create option positions with risk-reward
profiles that benefit them the most in a given situation. A trader’s objectives
will dictate the right strategy for the right situation. Traders can tailor a
position to fit a specific forecast with respect to the time horizon; the degree
of bullishness, bearishness, neutrality, or volatility in the underlying stock;
and the desired amount of leverage. Furthermore, they can exploit
opportunities unique to options. They can trade option greeks. This opens
the door to many new opportunities.