Volatility Practical Options Theory

Whilebooksexistonthemathematicaltheoryunderlyingoptions,thereisarelativeabsenceoftextsthatattempttoexplainhowtobringthesetheoreticalideasintopractice.Theauthorshowsthatseveralofthemostimportantconceptsinoptionstheorysuchasimpliedvolatility,deltahedging,timevalueandmanyoftheso-called“optiongreeks”canbeunderstoodbyappealingtointuitiveeconomicargumentsalone,withoutrelyingonaformalmathematicalmodel.OnlyoncethisknowledgeisinplacedoeshegoontoexplaintheseminalBlack-Scholes-Mertonmodel.Thereaderwillunderstandtheunderlyingtheoreticalassumptions,andtheirimplications,toadegreethatfacilitatespracticalimplementation.Theapproachtakeninthisbookmayprovevaluabletooptionstradersandotherpractitionerstaskedwithmakingpricingorriskmanagementdecisionsinanenvironmentwheretimeconstraintsmeanthatsimplicityandintuitionareofgreatervaluethanmathematicalformalism.Thetruechallengesinsuccessfuloptionstradingareconceptualratherthanmathematical,andtheauthortacklestheseconceptualchallengeshead-on.,