Strategies Considered in This Book

The nature of options makes it possible to create a considerable number of speculative trading strategies. Those can be based on different approaches encompassing the variety of principles and valuation techniques.

In many strategies options are used as auxiliary instruments to hedge main positions. In this book we are not going to delve into this field of options application since hedging represents only one constituent part of such trading strategies, but not their backbone.

Options may be used to create synthetic underlying positions. In this case the investor aims for the payoff profiles of an option combination and its underlying asset to coincide. This can increase trading leverage significantly. However, apart from leverage, automated trading of synthetic assets is no different from trading in underlying assets (besides the certain specificity regarding execution of trading orders, higher brokerage commissions, and the necessity to roll over positions). Thus, we will not dwell on such strategies either.