David Berns is a pioneer in the use of options and derivatives for both retail and institutional portfolio management. David is currently the Chief Investment Officer of Simplify, an asset manager bringing institutional-grade alternative strategies to ETFs.

Michael Green has been a student of markets and market structure for nearly 30 years and has a storied track record as a hedge fund manager at Canyon Capital Advisors, Ice Farm Capital, Logica, and Thiel Macro.

Preface xi

Acknowledgments xvi

Chapter One Trading Options: Allure vs. Reality 1

The Retail Option Explosion 2

The Natural Biases of New Traders 7

The Amateur Trap 10

An Intuitive Conclusion 12

Chapter Two The Barebones Option Primer 15

Option Basics 17

Options in Time 20

Breaking Down the Option Premium 23

Combining Options 31

Real- World Examples 35

Chapter Three Become the House 39

The Broader Option Ecosystem 40

Our Core Trade 45

Strike Selection 47

Expiry Selection 51

Equity ETF Puts for the Win 55

Chapter Four Risk Management 57

Moving Beyond "Sell and Hold" 59

Stop Losses 60

Profit Taking 64

Rolling Positions 67

Chapter Five Building a Portfolio 73

Motivation 75

Expanding Our Universe 77

A "Commonsense" Portfolio 84

Optimized Portfolios 89

Setting Risk Exposures 96

Chapter Six From Theory to Practice 101

Option Screener 103

Trading 108

The First Six Months 119

Beware Assignment 122

Behavioral Biases of Sellers 123

Parting Words 125

Bibliography 127