Friday, March 27, 2009

Learning About Options: The Exchanges (2)

When I first started drafting yesterday’s Learning About Options (1), I initially intended a brief overview of sources for those interested in teaching themselves about the subject of options. The more I thought about it, the more I decided that I really needed a multi-post series to properly address the subject and based on the enthusiastic response to the first post in this series, I am glad to have chosen that path.

In keeping with yesterday’s theme of free content from independent sources, today I wish to focus on the options exchanges. In the world of options exchanges, there are two large players at the top of the food chain. The Chicago Board Options Exchange (CBOE) is the undisputed leader in index options and a close second to the International Securities Exchange (ISE) when it comes to single-equity options volume.

The younger, all-electronic ISE has recently made a push to become more involved in education. The majority of the content for the ISE’s educational offerings utilize content from the Options Industry Council that I referenced in yesterday’s Learning About Options (1). This includes basic and advanced articles about options, a description of various options strategies, as well as several trading tools and online classes in options for beginner, intermediate and advanced traders.

In terms of non-OIC content, the ISE offers webinars and podcasts, but so far these have focused almost exclusively on foreign exchange trading, which I find more than a little disappointing. At this time, the ISE has posted over 350 videos in a YouTube ISE Options Education repository. Once again, forex is the dominant theme.

While the ISE has some material of interest, the CBOE has taken options education to an entirely different level, with a large amount of original content, covering a broad array of subjects and presented in just about every format imaginable. The CBOE even has a dedicated options education arm, The Options Institute, which offers a comprehensive set of tutorials, more detailed online courses, webcasts, seminars, “master sessions” with guest speakers and even customized programs. You can find these and most of the CBOE’s educational materials at the CBOE’s web site under the Learning Center tab.

Adjacent to the Learning Center tab are some options Strategies materials that are also worth checking out. In addition to information about the usual equity options strategies, the strategy tab includes information on LEAPS and index options that are rarely even acknowledged elsewhere on the web. More detailed explanations of advanced options strategies can be found in the archives of the Weekly Strategy Discussions.

The CBOE has also done some excellent work with top tier partners in the options space. The exchange has partnered with iVolatility.com to offer free IV index and options calculator tools, as well several premium options tools that come with free trials. For those who may be interested in virtual trading, the CBOE has two different approaches, based on partnerships with two of the top options brokers. The CBOE has worked with optionsXpress to deliver Virtual Trade Tool and with thinkorswim to offer paperMoney, each of which are virtual trading modules that are excellent ways for beginning traders to become familiar with the options trading process without putting real money at risk.

In terms of news, commentary and analysis, CBOE-TV continues to ramp up and has 3-4 new videos each trading day from the likes of Jon Najarian, Dan Sheridan and Angela Miles. This includes a great deal timely information that addresses options movers, economic data releases that are moving the market, etc.

Some of the newer features just rolled out this week include the Strategy of the Week program with Peter Lusk on CBOE-TV and a market commentary, which includes weekly articles from the staff of InvestorsObserver.

As you can see from some of the information I chose to highlight above, the CBOE offers best in class options education products and services, for the beginner to the advanced practitioner. If you are interested in learning about options, the CBOE is an invaluable educational resource.

4 comments:

Pankaj said...

Bill,

Great post summarizing all resources in one place! Do you personally follow these webinars and how much have they helped you hone your trading strategies?


Cheers,
Pankaj

Bill Luby said...

Hi Pankaj,

Thanks for the kind words.

While I think the CBOE and OIC are excellent resources, I have probably spent more time with the materials from optionsXpress and thinkorswim -- the subject of my next installment in this series.

Generally, I am looking primarily for background information and context when I review these materials, so any sort of application to trading strategies is usually indirect. Ultimately it all goes into some sort of mental stew that eventually comes up with new and revised trading strategies -- and all of the ingredients should get some of the credit.

That being said, all of these resources mentioned so far have excellent information on specific strategies, some of which you and I have not previously considered, I'm sure.

On a slightly different note, some of the CBOE material from Najarian is very specific, timely and actionable. Not so much generic strategy ideas as specific real-time opportunities in certain securities.

I hope this helps.

Good trading,

-Bill

Karl K said...

Excellent summary bill of the on line resources.

I would like also to point out the videos at the insane money bulletin board

http://insanemoney.com/video/

They tend to be trade/strategy specific, but worth viewing once a newbie gets more familiar with options.

Let me also add that while it is essential for a newbie to papertrade for a while (as you pointed out, thinkorswim's paper trading option is very good) it may give you an unrealistic sense of execution possibilities as the paper trader typically gets filled at the "mid" point between the bid and ask. That may happen in real life, but it also may not, especially in today's market for volatile underlyings where the spreads a big enough to drive a truck through.

y.f. dubble said...

great post. the COI had a great conference last week here in nyc on spreads and volatility. great resources, keep it up!

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