Options Trading - Theory for Professional Trading Of Share Market #697576

Options Trading : Theory for Professional Trading Of Share Market

The options market makes up for a significant part of the derivative market, particularly in India. I would not be exaggerating if I were to say that nearly 80% of the derivatives traded are options and the rest is attributable to the futures market. Internationally, the option market has been around for a while now, here is a quick background on the same –

o    Custom options were available as Over the Counter (OTC) since the 1920’s. These options were mainly on commodities

o    Options on equities began trading on the Chicago Board Options Exchange (CBOE) in 1972

o    Options on currencies and bonds began in late 1970s. These were again OTC trades

o    Exchange-traded options on currencies began on Philadelphia Stock Exchange in 1982

o    Interest rate options began trading on the CME in 1985

Clearly the international markets have evolved a great deal since the OTC days. However in India from the time of inception, the options market was facilitated by the exchanges. However options were available in the off market ‘Badla’ system. Think of the ‘badla system’ as a grey market for derivatives transactions. The badla system no longer exists, it has become obsolete. Here is a quick recap of the history of the Indian derivative markets –

o    June 12th 2000 – Index futures were launched o June 4th 2001 –Index options were launched o July 2nd 2001 – Stock options were launched

o    November 9th 2001 – Single stock futures were launched.



In this book we study :


*  Call Option Basics
*  Basic Option Jargons
*  Buying a Call Option
*  Selling/Writing a Call Option
*  The Put Option Buying
*  The Put Option selling
*  Summarizing Call & Put Options
*  Moneyness of an Option Contract
*  The Option Greeks (Delta)
*  Gamma
*  Theta
*  Volatility Basics
*  Volatility Calculation (Historical)
*  Volatility & Normal Distribution
*  Volatility Applications
*  Vega
*  Greek Interactions
*  Greek Calculator
*  Re-introducing Call & Put Options
*  Case studies – wrapping it all up!