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Acknowledgments xi <p>Introduction xiii</p> <p><b>CHAPTER 1 Market Scoring 1</b></p> <p>Intuition Can Be High Tuition 2</p> <p>The Role of Technical Analysis 3</p> <p><b>CHAPTER 2 Trend Scoring 9</b></p> <p>Trend-Scoring System 10</p> <p><b>CHAPTER 3 Volatility Scoring 27</b></p> <p>Volatility Overview 28</p> <p>Volatility Scoring System 34</p> <p>Know That You Don’t Know 42</p> <p><b>CHAPTER 4 Protecting Your Position 43</b></p> <p>Seven Keys to Risk Management Success 44</p> <p>Three Legs of Managing Risk 54</p> <p>Setting Stops 63</p> <p>Safety in Numbers 66</p> <p><b>CHAPTER 5 Covered Calls 67</b></p> <p>Getting to Know the Strategy 68</p> <p>Strategy in Action 70</p> <p>Strategy Management 71</p> <p>Strategy Application 76</p> <p><b>CHAPTER 6 Long Calls 81</b></p> <p>Getting to Know the Strategy 81</p> <p>Strategy in Action 85</p> <p>Strategy Management 91</p> <p>LEAPS 92</p> <p>Strategy Application 95</p> <p><b>CHAPTER 7 Long Puts 101</b></p> <p>Getting to Know the Strategy 101</p> <p>Strategy in Action 102</p> <p>Strategy Management 104</p> <p>Speculative Puts 107</p> <p>Collars 110</p> <p>Strategy Application 111</p> <p><b>CHAPTER 8 Straddles and Strangles 117</b></p> <p>Getting to Know the Strategy 118</p> <p>Strategy in Action—Straddle 119</p> <p>Strategy Management 122</p> <p>Strategy in Action—Strangle 124</p> <p>Strategy Application 125</p> <p><b>CHAPTER 9 Debit Spreads 131</b></p> <p>Getting to Know the Strategy 132</p> <p>Strategy in Action 135</p> <p>Strategy Management 136</p> <p>Strategy Application 141</p> <p><b>CHAPTER 10 Cash-Secured Puts 145</b></p> <p>Getting to Know the Strategy 145</p> <p>Strategy in Action 147</p> <p>Strategy Management 149</p> <p>Strategy Application 153</p> <p><b>CHAPTER 11 Credit Spreads 159</b></p> <p>Getting to Know the Strategy 160</p> <p>Strategy in Action 160</p> <p>Strategy Management 162</p> <p>Strategy Application 168</p> <p><b>CHAPTER 12 Horizontal Spreads 171</b></p> <p>Getting to Know the Strategy 173</p> <p>Strategy in Action 175</p> <p>Strategy Management 176</p> <p>Strategy Application 179</p> <p><b>CHAPTER 13 Diagonal Spreads 183</b></p> <p>Getting to Know the Strategy 184</p> <p>Strategy in Action 190</p> <p>Strategy Management 191</p> <p>Strategy Application 193</p> <p><b>CHAPTER 14 Index Options 197</b></p> <p>Getting to Know the Strategy 198</p> <p>Strategy in Action 204</p> <p>Strategy Execution 204</p> <p><b>CHAPTER 15 Butterfly Spreads 207</b></p> <p>Getting to Know the Strategy 208</p> <p>Strategy in Action 210</p> <p>Strategy Management 212</p> <p>Strategy Application 213</p> <p><b>CHAPTER 16 Iron Condors 217</b></p> <p>Getting to Know the Strategy 218</p> <p>Strategy in Action 218</p> <p>Strategy Management 221</p> <p>Strategy Application 223</p> <p>APPENDIX Strategy Profit and Loss Diagrams 227</p> <p>About the Authors 231</p> <p>Index 233</p>

<p>Rick Swope is a cofounder of Pro Market Advisors, which specializes in premier investment education and trading consultation services for retail and institutional clients such as E*Trade Financial Corporation, the Options Industry Council, and the International Securities Exchange. Previously, he was the co-owner and managing partner of one of the first online trading firms. He is the coauthor of <i>The Market Guys' Five Points for Trading Success</i> (Wiley).</p> <p>W. Shawn Howell is a cofounder of Pro Market Advisors. He spent a decade working with Charles Schwab's most affluent and sophisticated traders as well as managing teams of specialized brokers. In 2005, Shawn concluded his tenure as the divisional manager of Schwab's Active Trader Field Team to teach currency, stock, option, and technical trading strategies across North America for Investools. In 2007, he became the Managing Director of the forex enterprise for Thinkorswim Group Inc. In 2009, Shawn and longtime friend Rick Swope cofounded Pro Market Advisors.</p>

<p>Praise for <i>Trading by Numbers</i></p> <p>"Rick and Shawn's style of identifying trading opportunities is straightforward and simple to follow. They have done a terrific job of explaining the concepts of their proprietary approach and building upon those ideas in each chapter of <i>Trading by Numbers</i>. Experienced traders and beginning traders will take away solid trading strategies as well as important trade management techniques from this book."—DAN GRAMZA President, Gramza Capital Management</p> <p>"In <i>Trading by Numbers</i>, Rick and Shawn take a useful and practical approach in educating individuals who are considering using options in their personal portfolio. Rick and Shawn are at the top of their profession as far as educating the public on practical uses of options. <i>Trading by Numbers</i> does an excellent job taking their approach and putting it into words."—RUSSELL RHOADS, CFA Instructor, CBOE Options Institute</p> <p>"Fear of the unknown—we all have it. Nothing seems more complex, confusing, and unachievable than options trading. <i>Trading by Numbers</i> eliminates that fear, simply and clearly removing the mystery and showing you how, one step at a time, to trade like an options pro."—TODD KANE CEO, Cayrum</p>

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