I am currently starting my thesis paper which I would like to focus on option strategies. I am not an expert in the subject by any chance, more of a newbie who is very keen on learning in order to eventually participate in the complex world of derivatives. Despite my lack of knowledge in options, I have opted for this topic in order to research, study, learn and eventually write about the intrincacies of option dynamics - and the subsequent development of strategies in order to profit in varying market conditions. Can anybody recommend good reading material (books, other theses, websites, etc.) where I can start educating myself on the subject at hand? Thank you for your help in advance.
This is a huge topic (like any other one) so you really need to try to narrow it down a bit so it is easier to start researching it. Are you interested in arbitrage, information that the option market may provide, order flow,...
Options is a huge topic. If I were to write a thesis on options my topic would be along the lines of how every business should have an option strategy, esp small business. I would suggest any entrepreneur incorporate an option strategy in their business plan. If your company requires a lot of travel, you should have an options hedge in airlines. If your company is sensitive to gasoline prices, one might have gasoline futures strategy. Point being, whatever business you are in, figure out the hedge and have it become part of your business plan. Large companies may do this, but smaller businesses aren't up to speed in this dept. This may not be what you had in mind, but one more option thesis and your professor's eyes may glaze over. Good luck.
Since you are a complete beginner you will want to start with books written for complete beginners. http://tinyurl.com/3yo74x and http://tinyurl.com/3dvxcc will get you started. These books describe all of the basic option trading strategies and tell you the ideal environment (high volatility? low volatility? trending? directionless? volatility rising? volatility falling?) for each. If your professor doesn't have practical experience with actually trading options using real money in the real world, merely regurgitating the information in these books will be enough to complete a thesis. On the other hand, if your professor won't be satisfied with a paper that simply copies the basic strategy diagrams and descriptions out of an introductory book, you may want to go deeper. I would suggest Gallacher and Cottle and Natenberg. Others will of course have different suggestions. http://tinyurl.com/3dwrza and http://tinyurl.com/37ns46 and http://tinyurl.com/3a45vz are their major works.