Option Market Making

Informationen zum Autor Allen Jan Baird, PhD, is a director of equity trading responsible for training and managing proprietary traders as well as trading firm capital. He was a member of the New York Board of Trade where he was an options market maker for thirteen years. He has taught at the New York Institute of Finance and is the author of Option Market Making: Trading and Risk Analysis for the Financial and Commodity Option Markets (Wiley). He is a graduate of the University of California at Berkeley and holds a PhD from the University of Pennsylvania. He can be reached at allenjanbaird@hotmail.com. Klappentext Every day, market makers account for half a billion dollars in the option trade, bringing liquidity and stability to the commodity, bond, currency, stock, and futures options markets by being ready to buy or sell some quantity of any option at a specified price. The width of the bid/asked price spread determines the market maker's profit. But, if it's just buy-low sell-high what's the big mystery? Controlling option risk. Option risk is more complex and comes in more varieties than most other investment risks. That's why traders, speculators, hedgers, scalpers, and market makers everywhere will draw considerable understanding and profit from this first book length guide to market making. Inside you'll find valuable information and tips on the economics of market making and the basics and terminology of options, covering fair value models, volatility, and differences between option markets; option risk, risk measurement, and the range of risk profiles possible in single one-month trades with definitions, analytical tools, and strategies; synthetic price relations and how to master this almost risk-free core of option arbitrage trading; calendar spread risk and strategies for limiting it and still using time markets efficiently; delta-neutral and limited risk strategies for nonsynthetic market making, including the butterfly/ratio time spreads; and option market maker software listings and information. Provides an insider's insights on the complexities of the option market maker's world. In this increasingly competitive arena, Option Market Making gives you the tools you need to beat the odds - and make the trade. Zusammenfassung Approaches trading from the viewpoint of market makers and the part they play in pricing! valuing and placing positions. Covers option volatility and pricing! risk analysis! spreads! strategies and tactics for the options trader! focusing on how to work successfully with market makers. Inhaltsverzeichnis Economics of Option Market Making. Options. Option Risks. Position Risk Profiles. Synthetic Option Market Making. Calendar Spread Risk. On Strategy. Market-Making Tactics. Observations from the Floor. Appendix. References and Suggested Reading. Index. ...

Klappentext

Every day, market makers account for half a billion dollars in the option trade, bringing liquidity and stability to the commodity, bond, currency, stock, and futures options markets by being ready to buy or sell some quantity of any option at a specified price. The width of the bid/asked price spread determines the market maker's profit. But, if it's just buy-low sell-high what's the big mystery? Controlling option risk. Option risk is more complex and comes in more varieties than most other investment risks. That's why traders, speculators, hedgers, scalpers, and market makers everywhere will draw considerable understanding and profit from this first book length guide to market making. Inside you'll find valuable information and tips on the economics of market making and the basics and terminology of options, covering fair value models, volatility, and differences between option markets; option risk, risk measurement, and the range of risk profiles possible in single one-month trades with definitions, analytical tools, and strategies; synthetic price relations and how to master this almost risk-free core of option arbitrage trading; calendar spread risk and strategies for limiting it and still using time markets efficiently; delta-neutral and limited risk strategies for nonsynthetic market making, including the butterfly/ratio time spreads; and option market maker software listings and information. Provides an insider's insights on the complexities of the option market maker's world. In this increasingly competitive arena, Option Market Making gives you the tools you need to beat the odds - and make the trade.

Zusammenfassung
Approaches trading from the viewpoint of market makers and the part they play in pricing, valuing and placing positions. Covers option volatility and pricing, risk analysis, spreads, strategies and tactics for the options trader, focusing on how to work successfully with market makers.

Inhalt
Economics of Option Market Making. Options. Option Risks. Position Risk Profiles. Synthetic Option Market Making. Calendar Spread Risk. On Strategy. Market--Making Tactics. Observations from the Floor. Appendix. References and Suggested Reading. Index.