212exit strategies, 212margin, 214market opportunity, 213–214, 
520
overview of, 211–212, 520risk graph, 212, 215risk/proﬁt proﬁle, 213–214, 520Short strike, 103, 139, 143, 148, 156,
158, 160, 162
Short-term at-the-money call, 286Short-term options, 57Short-term trades, 15Shorting options, 34Shorting stocks, 74Shorting the market, 13, 54, 70Sideways market, 2, 266, 300–301,
309–310, 422
Sideways-moving stock, 231Sideways trades, 206Single stock futures (SSFs), 29–30Small-cap stocks, 19Small investments, 450Small order execution system
(SOES), 359–360
Small trades, 12Socially conscious investing, 22Socially responsible stocks, 20Specialists, functions of, 355Specialist trading/specialization, 13,
Short straddle:
427
breakeven, 203–205, 207, 519case study, 205–207exit strategies, 204margin, 207market opportunity, 205, 207, 
519
mechanics of, 203overview of, 202, 519risk graph, 203–204, 206risk/proﬁt proﬁle, 205, 207, 519synthetic, 192
Speculation/speculators, 26–27, 29,
244
Spiders (SPY), 32Spreads, implications of, 113. Seealso speciﬁc types of spreads
Spreadsheet programs, 79Standard & Poor’s 100 Index (SOEX),
352
Standard & Poor’s 500 (S&P 500)
Index (SPX), 12, 23, 26, 30, 33,48, 76, 352
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INDEX
Standard & Poor’s 500 Cash Index(S&P 500 Cash Index), 442
Statement of cash ﬂows, 420Statistical volatility, 39, 178–179,
184–185, 429, 472Stewart, Martha, 394Stock(s), generally:
characteristics of, 16–18classiﬁcation of, 20–21common, 19–21dividends, 18, 20–21IPO system, 24–26market capitalization, 19preferred, 19–21sectors, 21, 23–24splits, 64, 199types of, 22
Stock exchanges, 17Stock investors, characteristics of, 
2
Stock market, generally:
characteristics of, 384–387, 401crash of 1987, 251historical perspective, 507–509
Stock options, 36, 72–73Stock reversals, 209Stop-loss orders, 93, 380Stop-loss rules, 379–380Stops, 13Straddles:
adjustment strategies, 313–315long, 189, 193–202, 225–227, 473,
511, 519
long synthetic, 191–192, 215–224,
228–231, 317–322, 522
order placement, 364short, 202–207, 519short synthetic, 192success factors, 190
Strangles:
long, 207–211, 227–228, 520short, 211–215, 520
Strike price:codes, 503implications of, 35, 37, 43–45, 49,53, 56–57, 62, 64, 69–70, 92, 95,102, 107, 112, 116, 121–123,125–127, 133–134, 155, 157–159,161, 227
Successful traders, advice from, 473,
475–478Success guides:
nine-step formula, 527–529rules for success, 529–530trading tips, 480–481
Support and resistance level, 100,
298, 300, 310, 467
Support level, 100Swiss franc, 28Synthetic straddle:
long, 215–226, 228–231order placement, 367–368SyQuest Technology, Inc., 449Systematic approach, 10
Takeovers, 199Taxation, margin accounts, 375Technical analysis, 380, 421–423, 444,
448, 455, 480
Technical Analysis of Stocks &
Commodities, 500
Technicians, deﬁned, 421Technology sector, 24Technology stocks, 65Templeton, Sir John, 47610-K/10-Q statement, 417Terrorist attack (9/11), economic
impact, 1–2
Theta, 69, 176, 178–180, 314, 454Thinkorswim, 334Tick, 168Tick-by-tick traders, 173Time-based adjustments, 316Time decay, 45, 57–58, 68–69, 159,
Strategic trades, 76Strategy reference guide, 511–513Stress level, reduction of, 12–14, 129
180–181, 185, 210, 226, 230, 232,265, 306, 311Time erosion, 270, 281
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Index
Time frame, 470Time horizon, 405Time stop-loss, 380Time value, generally:
decay, 199implications of, 65–68, 73, 176, 232,
265, 288premium, 69
Trade balance, 399–400Trade execution, 6, 338–340Trade process:
delta neutral trades, 364–366electronic order routing systems, 
358–360
exchanges, 347–348FOREX market, 348–350futures (commodity) orders,
355–357
ordering mistakes, avoidance of,
366–368
order mechanics, 360–364order placement, 357–358, 368–369stock market order process,
354–355
575
short put, 110–114, 125–126, 128,
517
short stock, 85–89, 128, 514strategy road maps, 119–127Trading systems, computerized,
412–413
Trading volume, 64–65, 429, 458–459Transportation sector, 24Treasury bills (T-bills), 28Treasury bonds (T-bonds), 28, 382Treasury notes (T-notes), 28TRIN, 428Triple witching, 48Trust Indenture Act of 1939, 394Turnaround stocks, 22200-day moving average, 89
Uncertainty, 169, 171–172, 479Underlying assets, 172Underlying security, 46, 49, 93, 102Underlying stock, 43, 62, 68–69, 
156
Underpriced options, 259Undervalued options, 125, 225, 229,
Traders, investors distinguished
256, 261, 307
from, 6–7Trading capital, 9–10Trading desk, 397–398Trading ﬁlter, components of,
434–451
Trading opportunities, recognition
of, 6, 10
Trading plan, importance of, 480–481Trading resources, see Information
resourcesTrading strategies:
covered call, 99–106, 122–123, 128,
516
covered put, 115–119, 126–128, 516long call, 89–94, 119–120, 128, 514long put, 106–110, 123–124, 128,
515
long stock, 81–85, 128, 513overview of, 76–77short call, 95–99, 120–121, 128, 514
Unemployment report, 388U.S. dollar, 27–29, 383, 399–400U.S. Treasuries, 353U.S. Treasury bond, 382Unit of trade, 57Up/down volume, 427Up market, 2Uptick, 190Uptrends, 422Utilities sector, 20
Vacation trading, 243, 263Value Line, 426Vega, 176, 178–181, 185–186Vertical spreads:
bear call spread, 130–132, 146–151,
161–163, 518
bear put spread, 130, 132, 137–141,
156–158, 163, 517bid-ask spread, 152–154
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INDEX
Vertical spreads (Continued)
bull call spread, 130, 132–137,
Voting rights, 21VXN, 431–432
154–156, 163, 518
bull put spread, 130–132, 141–146,
158–160, 163
mechanics of, 131–132order fulﬁllment, 151–152overview of, 130–131strategy road maps, 154–162VIX (CBOE Volatility Index), 352,
430–431
Volatile markets, characteristics of,
128–129
Volatility, see speciﬁc types of
volatility
charting, 458–459delta neutral trading, 169–174,
189–190, 263
forward volatility skew, 250, 261Greeks, generally, 181–185impact of, generally, 15, 36, 45, 47,
311
information resources, 200 long call strategy and, 91price skews, 286reverse volatility skew, 161, 256,
259–260, 263
WallStreet*E, 334Wall Street Journal, The, as
information resource, 21, 39,163, 183, 442–443, 489, 501
Wal-Mart Stores (WMT), 78–81Wasting assets, 45, 68Wealth accumulation, 7Wealth creation, 25Web sites, as information resource:
analysis tools, 501charts and quotes, 497–498educational, 495–496exchanges, 496–497informative sites, generally, 58, 
62, 64, 163, 377, 501–502
news sources, 498–501Optionetics.com, 493–494
Whipsawed traders, 433Wholesale trade, as economic
indicator, 389Wilder, Welles, 200Willpower, importance of, 7Wilshire 5000, 31Wings, long butterﬂy spread, 
skew, 183, 255–256, 263–264,
266
285–286, 292time skews, 286types of, 183–185Volatility Course, The
(Fontanills/Gentile), 40Volatility Index (VIX), 430–431Volume, implications of, see Trading
volume
WorldCom, 394World events, economic impact, 
1–2
Writers, deﬁned, 34, 46Writing options, 34
Yahoo! (YHOO), 152Y2K, 393
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