How we trade options PDF

How we trade options PDF

How we trade options PDF (Building Wealth, Creating Income, and Reducing Riskby Jon “DRJ” & Pete Najarian.

Category: Options

Author: Jon “DRJ” & Pete Najarian 

Language: English

Free download link: At the end of the post

E4T’s suggestion for you: Options for beginners- Don Fishback


After fnishing my first book about options amid the dot-com collapse in 2001, I assumed that I would never get another opportunity to write about the markets in turmoil of such magnitude. Little did I know that we would witness far more sweeping changes to our fnancial system and everyday trading barely a decade later. To that end, I recruited my brother Pete to help map this drastically
changed landscape.
The earlier crisis introduced the general public to the concept of stock options, as an entire generation of dot-com entrepreneurs and employees learned how these contracts worked within their companies. Whether these internal options translated into stakes worth millions or nothing, it was an indelible lesson. Thanks to the entrepreneurial culture of Silicon Valley, terms such as “vesting,” “grants,” and “strike prices” became part of the nomenclature for twentysomethings who might otherwise never have owned a single share in any company. Tat, in turn, helped spur interest in trading of stock options on the open market.
At the same time, the explosion of online brokerages, social networks, and vast amounts of free research on the web initiated millions of “retail” investors who could venture into the trading world on their own. If that planted the seeds of interest, the fnancial crisis of 2008 watered the phenomenon of option trading into full bloom.
For generations, Wall Street has been dominated by monolithic institutions that reserved the most lucrative opportunities for members of their exclusive domain. Wielding dominant influence and operating behind the scenes, these powerful entities—investment banks, hedge funds, large brokerages, and other “masters of the universe”—effectively squeezed out countless traders who
simply couldn’t compete against the enormous positions taken on a daily, if not hourly, basis.

All that changed when the mortgage industry crashed. Te massive disruption that ensued shook markets around the globe and ended a Wall Street hegemony that had reigned for more than 100 years. As with many natural and man-made catastrophes throughout history, however, what initially considered scorched earth quickly became viewed as a level playing feld.

In this new world order, achieving returns comparable to those of professionals does not require huge amounts of capital or expertise in obscure vehicles such as credit-default swaps. But it does demand mastery of a newer products, strategies, and technologies.
The cataclysm has not only fundamentally altered the fnancial universe but, coming so soon afer the dot-com crash, has also made clear the imperative for retailers to take decision-making into their own hands with such tools as derivative stock options. In chaos, as it’s been said, is opportunity.
— Jon Najarian

Table of Contents- How we trade options PDF


Part 1: How We Trade Options

Part 2: A Brief History of Options (and Why You Should Care)

Before Trading Was Digital

The Crash of 2008

Case Studies in Trading

The Flash Crash

Market Manipulation

Part 3: Core Concepts


About the author

Jon and Pete Najarian are professional investors, noted media analysts, and co-founders of optionMONSTER and tradeMONSTER.

Jon, the oldest of four brothers, and Pete, the youngest, grew up in California and Minnesota, each following their father in playing college football. Both would enjoy stints in the professional game before turning to another pursuit sometimes seen as a contact sport – trading on the Chicago Board Options Exchange (CBOE).

Jon, ofen known by his call letters, “DRJ”, a nod to his dad, launched his fnancial career in 1981 afer a concluding Mike Singletary was likely to beat him out as starting linebacker for the Chicago Bears. Jon would go on to trade in the pits for some 25 years. In 1989 he founded Mercury Trading, running the company for 15 years until 2004, when he sold his floor-trading operations to
Citadel, one of the world’s largest hedge funds. Pete, who enjoyed several seasons with the Tampa Bay Buccaneers and Minnesota Vikings, took up trading in 1992. Joining his brother, he subsequently led Mercury’s entry onto the New York Stock Exchange, and served as president
from 2000 to 2004.
More recently the duo developed and patented trading applications used to identify unusual activity in stock, options, and futures markets, notably the Heat Seeker® program, which scans up to 7 million quotes per second. Jon contributes to CNBC, has been published in Barron’s, and is widely cited by fnancial media including the Wall Street Journal, Reuters, and Bloomberg.
Pete is a cast member of CNBC’s “Fast Money”.

E4T’s suggestion for you: Option as a strategic investment- Lawrence Mcmillan

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