Learn trading ideas & strategies from TradeKing's experts

Upcoming Live Events
More live events...
Learn it. Trade it.

Open your TradeKing account today!

Upcoming Live Events
More live events...

The Options Playbook

by Brian Overby

Buy this book

The Options Playbook was created to demystify option trading and teach investors different option plays for all market conditions. No confusing jargon. No unnecessary mumbo-jumbo. Just clear, easy-to-understand explanations of more than 40 of the most popular option strategies broken down into a play-by-play format including:

  • Play Name: Covered call, Long put, Iron condor, etc.

  • The Setup: The goals and reasons to run each play

  • Who Should Run It: Rookies, Veterans or All-Stars, based on degree of difficulty

  • When To Run It: Describes each play as bullish, bearish or neutral

  • The Strategy: A detailed overview of each strategy and their risks

For the first-time option trader, The Options Playbook features a "Rookie's Corner," addressing the basic definitions and concepts you need to understand this market, tips to avoid common beginner’s mistakes, and suggested strategies to "get your feet wet".

For more experienced option traders, an expanded section on implied volatility explains how this handy variable can be used to estimate the potential range of the stock over the options life. A detailed section on pricing variables (Greeks) helps you understand how an option’s price is affected by changes in market conditions. Although their forecasts are not guaranteed, implied volatility and the Greeks may provide experienced traders a way to estimate option changes due to market factors. You’ll also learn how time decay and a change in implied volatility can affect your trade after it’s in place and how to recover if things don’t go according to plan.

The Options Playbook features Options Guy Tips from TradeKing Senior Analyst Brian Overby. Like any good coach, Overby’s handy insights help you put theory into successful real-world trading.

This expanded second edition includes 10 new plays and 56 new pages of handy content describing a brief history of options, five common mistakes options traders make and how to avoid them, an expanded glossary, and how to manage option positions by rolling to a different month and strike. Also explained are the differences between index and equity options, managing early exercise and assignment, and how to calculate position delta and use it to manage overall position risk.

Option strategies entail risk and are not appropriate for everyone. Before trading options, you should review Characteristics and Risks of Standardized Options. Some option strategies involve multiple positions simultaneously. These multi-leg strategies incur additional commissions and may invoke special treatment when preparing your taxes. If you are unsure about how a particular strategy may impact your financial picture, please consult a tax professional before trading.

Related Strategies

419 Double Diagonal Image
Double Diagonal At the outset of this strategy, you’re simultaneously running a diagonal call spread and a diagonal put spread. Both of those strategies are time-decay plays. You’re taking advantage of...

414 Short Strangle Image
Short Strangle A short strangle gives you the obligation to buy the stock at strike price A and the obligation to sell the stock at strike price B if the options are assigned. You are predicting the stock price...

523 Long Inverse ETF
Long Inverse ETF The concept behind inverse ETFs seems quite simple – emphasis on “seems”. When the underlying target index goes down, the value of the ETF is designed to go up. The target index may be broad-based,...

More strategies...

All-Star Analysis

What are unsettled funds and why am I being warned or restricted from using them? on 05/18/2011
Under Regulation T of the Securities and Exchange Act of 1934 all transactions in a cash account must be paid for in full and are also...

Rookie in need of help. on 02/05/2013
Options are a good choice but plan on studying them and then practicing with them so you can get a good feel on how they operate regarding...

412 Short Put Image on 12/16/2010

More analysis...

On-Demand Videos

514 Condors vs. Butterflies: Is there an
Condors vs. Butterflies: Is there an "Ideal" Strategy, part 2

Join Nicole Wachs as she compares and contrasts these popular strategies. For each play, she covers the basics, main...

499 OPB Series 6: Meet the Greeks
Meet the Greeks

Understanding the Greeks is critical before implementing your option strategy. In Part 6 of his Options Playbook...

2229 Volatility and Probability
Volatility and Probability

Learn about the different inputs for the Black Scholes model. Brian Overby discusses how he uses options statistics...

More videos...