Introduction
Spread Trading is the new trading book from Greg Jensen. As the title suggests, the book is about spread trading, which is most often performed using options, and hence the book is also about options trading. Spread Trading discusses options trading and spread trading in detail, and according to the author, the book is designed for traders without any previous options trading knowledge or experience.
Spread Trading consists of thirty-seven chapters and a total of 352 pages. The book is divided into nine sections (called steps in the book), with four sections covering options trading basics, once section covering options trading strategies, and four sections covering spread trading.
Spread Trading discusses stock and stock options markets, and primarily uses a made up stock in its written examples, but uses real stocks for its graphical chart examples. However, the options trading and spread trading strategies can be applied to all options markets (e.g. stock index options, currency options, etc.).
Spread Trading was written by Greg Jensen, and is one of the many financial trading books that are published by Wiley Trading.
About The Author
Greg Jensen is the co-founder of Spread Trade Systems, which provides investment education specializing in options trading. Further information about Greg Jensen is available at the Spread Trade Systems web site.
Sections One to Four - Options Trading Basics
The first four sections of Spread Trading provide an introduction to options and options trading.
The first section consists of ten chapters, and explains what call options are and how they work (e.g. their rights and obligations, etc.). The second section consists of eight chapters, and explains what put options are and how they work. The third and fourth sections consist of five and eight chapters respectively, and explains some of the additional aspects of options trading, such as trading options without trading their underlying stocks, trading options using leverage, and combining multiple options into a complete strategy.
Section Five - Basic Options Strategies
The fifth section of Spread Trading explains two basic options strategies, namely a long put (i.e. using a put as insurance for a stock trade), and a covered call (i.e. selling a call while being long the underlying stock).
The long put and the covered call are explained in detail, including the reasons that they might be traded, and how their potential risk and reward can be calculated. Experienced options traders may notice a few slightly misleading comments in the explanations (such as uncovered short options being "dangerous"), but otherwise, the explanations are correct.
