108 lines
2.8 KiB
Plaintext
108 lines
2.8 KiB
Plaintext
992
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Option purchase and spread, combining, 339-341 (see
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also Spreads combining calls and puts)
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Options:
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arbitrageurs, role of, 19-21
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risk arbitrage, 21
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assignment, 7, 16-17
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anticipating, 18-22 (see also Assignment)
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margin requirements, 15-17
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classes and series, 5-6
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closing transaction, 6
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commissions, 17-18
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definition, 3-4
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as derivative security, 4
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"European" exercise options, 7
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exercising, 6-7, 15-16
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after, 17
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early, due to discount, 19-20
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early, due to dividends on underlying stock, 20-22
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premature, 19-22
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holder, 6
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in-the-money, 7, 8
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LEAPS, 5
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symbols, 26-27
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markets, 22 (see also Option markets)
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open interest, 6
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opening transaction, 6
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option price and stock price, relationship of, 7-9
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order entry, 32-34
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good-until-canceled order, 34
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information, 32
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limit order, 33
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market order, 32
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market not held order, 33
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stop-limit order, 33-34
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stop order, 33
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out-of-the-money, 7
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parity, 8-9
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premature exercise, 19-22 (see also Options, exercis
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ing)
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premium, 7-8
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price, factors influencing, 9-15 (see also Price of
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option)
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profits and profit graphs, 34-35
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specifications, four, 4
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standardization, 4-5
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expiration dates, 5
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striking price, 5
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symbology, 23-27
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CBOE's Web site, 23
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expiration month code, 23
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LEAPS, 26-27
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option base symbol, 23
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stock splits, 27
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striking price code, 24-25
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summary, 27
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wraps, 25-26
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time value premium, 7-8, 11
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trading details, 27-32
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limit order, 28
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one-day settlement cycle, 28
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position limit and exercise limit, 31-32
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rotation, 28
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value, 4
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as "wasting" asset, 4
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writer, 6
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Index
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Options to buy, selecting, 101-103 (see also Call buying)
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Options Clearing Corp. (OCC), 6, 15-16, 673
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Options on futures, 660-673 (see also Futures and
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futures options)
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Options and Treasury bills, buying, 413-421
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advantages, 413, 421
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annualized risk, 416-418
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excessive risk, avoiding, 420-421
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how strategy works, 413-421
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risk adjustment, 418-420
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risk level, keeping even, 415-416
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summary, 421
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synthetic convertible bond, 414
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Order entry for options, 32-34 (see also Options)
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Original Issue Discount (OID), 592-593
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Out-of-the-money:
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call spread, 222-225
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covered writes, 43-45, 93
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definition, 7
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for put options, 246-247
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Outright option purchases and sales, effect of, on
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implied volatility changes on, 757-762
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Pairs trading, 454-455
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Parity, 8-9
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Percentile of implied volatility approach, 814-818
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composite implied volatility reading, 815
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historical and implied volatility, comparing, 817-818
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PERCS (Preferred Equity Redemption Cumulative
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Stock), 91, 619-637
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call feature, 620-622
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redemption price, 622
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sliding scale, 620-621
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covered call write, equivalent to, 622-623
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definition, 619
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life span, 619
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owning as equivalent to sale of naked put, 626
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price behavior, 623-625
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strategies, 625-636
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delta of imbedded call, using, 630-631
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hedging PERCS with common stock, 631-6:32
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issue price, determining, 633-634 |