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New PDF release: Option Market Making: Trading and Risk Analysis for the

By Allen Jan Baird

Methods buying and selling from the point of view of industry makers and the half they play in pricing, valuing and putting positions. Covers alternative volatility and pricing, threat research, spreads, innovations and strategies for the choices dealer, targeting the best way to paintings effectively with industry makers. encompasses a targeted part on artificial concepts and the function of man-made recommendations industry making (a function of accelerating significance at the buying and selling floor). comprises quite a few graphs, charts and tables.

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Allen Jan Baird's Option Market Making: Trading and Risk Analysis for the PDF

Methods buying and selling from the point of view of marketplace makers and the half they play in pricing, valuing and putting positions. Covers alternative volatility and pricing, hazard research, spreads, suggestions and strategies for the choices dealer, targeting how one can paintings effectively with industry makers. encompasses a specific part on artificial concepts and the function of artificial thoughts marketplace making (a function of accelerating significance at the buying and selling floor).

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Additional resources for Option Market Making: Trading and Risk Analysis for the Financial and Commodity Option Markets

Example text

Thus, the market maker may end up owning or shorting contracts that he or she must be prepared to hold for long periods of time (even to expiration) unless he or she wishes to liquidate to other market makers, thus giving up the edge. Almost invariably, therefore, options scalpers must assume carryover positions on a regular basis, something a futures scalper does not do. It is a rare option market maker who is able to go home at the end of the day completely flat without overnight positions. Option market makers assume a large carryover risk that other financial dealers may not, and this longer-term assumption of risk may affect dealer price.

Balsara The Mathematics of Money Management: Risk Analysis Techniques for Traders Ralph Vince Treasury Operations and the Foreign Exchange Challenge: A Guide to Risk Management Strategies for the New World Markets Dimitris N. Chorafas The New Technology of Financial Management Dimitris N. Chorafas Fixed-Income Synthetic Assets Perry H. , to have books of enduring value printed on acid-free paper, and we exert our best efforts to that end. Copyright © 1993 by Allen Jan Baird Published by John Wiley & Sons, Inc.

Fortunately, not all option trading positions are catastrophically risk exposed, and some are limited-risk strategies. Limited-risk strategies for option market makers are not only safer than other option strategies, but also they are often safer than trading in the underlying asset itself. Knowledge of risk is the key to market-making option strategy. Limited-risk strategy does not mean limited profits. Many low-risk strategies will also earn among the highest possible rates of return of any option strategy.

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Option Market Making: Trading and Risk Analysis for the Financial and Commodity Option Markets by Allen Jan Baird


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