The concept of profiting from trading volatility is not new, but is known to only a few players in the derivatives industry. Buying and Selling Volatility is the first book to explain this trading strategy in detail without using complex mathematics. Offering a new approach to the subject of options, seen purely from a volatility viewpoint, the author uses illustrations to clearly explain the connection between volatility and options. He explains how investors can profit from the volatility, or lack of volatility, of an option price regardless of whether the market rises or falls. Useful to both novice investors and professional traders, Buying and Selling Volatility also supplies the reader with a risk management software system that is comparable to those used commercially.
Book Details:
- Author: Kevin B. Connolly
- ISBN: 9780470325841
- Year Published: 1997
- Pages: 230
- BISAC: BUS036000, BUSINESS & ECONOMICS/Investments & Securities / General
About the Book and Topic:
The concept of profiting from trading volatility is not new, but is known to only a few players in the derivatives industry. Buying and Selling Volatility is the first book to explain this trading strategy in detail without using complex mathematics. Offering a new approach to the subject of options, seen purely from a volatility viewpoint, the author uses illustrations to clearly explain the connection between volatility and options. He explains how investors can profit from the volatility, or lack of volatility, of an option price regardless of whether the market rises or falls. Useful to both novice investors and professional traders, Buying and Selling Volatility also supplies the reader with a risk management software system that is comparable to those used commercially.
To make a profit, most individual investors and fund managers are forced to take a view on the direction of the price of something. The traditional investment strategy is to study all the aspects of the market place and decide on the value of the instrument under study. If the instrument is cheap, you buy and if it is expensive, you sell. The traditional view taker is looking at only one dimension of a price sequence – the direction. Options can allow investors to completely ignore the direction of the price and to concentrate on the second dimension – the volatility of the price. It is possible to construct a portfolio containing a given stock and stock options and be completely indifferent to the direction of the price whilst profiting from the volatility of the price.
A unique approach to the subject of options, seen purely from a volatility viewpoint. Clearly explains the connection between volatility and options without recourse to complex maths. An accessible guide for students, it also offers experts a fresh look at instruments they have been trading for years.
About the Author
Kevin B. Connolly used to be Head of Quantitative Research at JamesCapel & Co. He then joined Cresvale International AssetManagement as Director responsible for instituting scientific riskmanagement for Cresvale’s principal Japanese warrants market-makingsection. He is currently undertaking research into complexvolatility trading for Refco Overseas Ltd, and is setting up salesand trading systems for Japanese warrants and convertible bonds forIndependent Capital Corporation. He also lectures at CityUniversity Business School and London Guildhall University, UK.