Last Updated on November 16, 2020
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Are you interested in dabbling in the world of Wall Street? Are you in need of help in strategizing your investments and analyzing economies? Acquaint yourselves with the concepts of finance by investing in this list of best books about options trading. An option is a contract allowing the buyer, but not required, to buy or sell an underlying instrument or asset at an established price on or before a specified time. Two types of options are the call option, which grants buyers the right to buy securities, and the put option, which grants buyers the right to sell securities. Thus, options trading is the marketing of options that have many forms, such as exchange-traded options and over-the-counter options. Read more about options trading from these great authors listed below.
Contents
1. Options as a Strategic Investment: Fifth Edition (By Lawrence G. McMillan)
McMillan’s Options as a Strategic Investment provides low-risk market-tested tools for strategic management and improvement of investments and earnings. The book tackles different concepts and applications of option strategies to help investors in the options market. It also illustrates these strategies under market conditions using exhibits, checklists, and examples.
This edition features the plan of action for Long Term Equity Anticipation Securities (LEAPS), the intricate analysis of neutral trading, the investing guidelines for Preferred Equity Redemption Cumulative Stocks (PERCS), and the summary of how futures and futures options work. Furthermore, it discusses the use of index options and futures in protecting portfolios and the inference of the tax laws as well as the permitted gains and losses over a long time.
- Review: The book is well-written with comprehensive information. It is a valuable reference for the options market as it thoroughly explains all techniques and strategies available. It ultimately focuses on defined risk strategies that are helpful when dealing with the US market. The book also offers the best explanation about time value decay and its relation to the volatility of the underlying stock. It is a great resource material for self-studying and further learning about options trading. However, this heavy book is specifically written for people with prior knowledge about the options market. It also uses hypothetical examples, instead of real-life trades.
- Author: Lawrence G. McMillan is a professional trader and a best-selling author. He earned his M.S. in applied mathematics and computer science at the University of Colorado in 1972. He was a proprietary trader at Thomson McKinnon Securities, Inc. from 1976 to 1980 and at Prudential-Bache Securities in 1989-1990. He founded his own firm, McMillan Analysis Corporation, in 1991. He is a recipient of the Joseph W. Sullivan Award in 2011 for his contributions to the options industry.
- Pages: 1072
- Publisher: Prentice Hall Press (August 7, 2012)
2. Understanding Options (By Michael Sincere)
This book introduces options investing with informative illustrations, charts, and techniques. It guides the reader through the workings of options by building conceptual foundations. It also explains the relationship of options with stocks and their usefulness in obtaining leverage and extra income. Furthermore, this reference includes coverage about LEAPS, conquering assignment anxiety, the greeks, credit and debit spreads, the collar, straddles, the strangle, protective and married puts, and option tips.
- Review: Sincere’s Understanding Options is easy to read such that common investors easily understand the fundamentals of the options market. It is a handy reference with a solid foundation from basic to advanced trading. The chapters’ contents are dynamic and progressive with simplified terminologies. The book can be a primer or a refresher, depending on the expertise of the readers. However, some examples are in verbal form, which may be difficult to conceptualize. Furthermore, the book also needs companion books about options trading.
- Author: Michael Sincere is an author, teacher, and corporate trainer. He has written numerous business books about investing and trading. He is featured in Marketwatch/ The Wall Street Journal as a financial columnist and also appeared on economic news programs such as CNBC and ABC’s World News Now. His other popular nonfiction books include All About Market Indicators, Understanding Stocks, Predict the Next Bull or Bear Market and Win, and Start Day Trading Now.
- Pages: 320
- Publisher: McGraw-Hill Education (January 6, 2014)
3. Option Volatility and Pricing: Advanced Trading Strategies and Techniques (By Sheldon Natenberg)
Natenberg’s Option Volatility and Pricing has been the usual reference of professional traders in the options industry. It teaches that success in this market comes from learning the strategies and techniques of the trade. The book further shows that options trading is a combination of science and art since it applies both rigorously.
This resource material is a valuable addition to the options trader’s library. The book includes the discussion on the numerous aspects of the options industry, such as the foundations of theory, dynamic hedging, volatility and directional trading strategies, risk analysis, position management, stock index futures and options, and volatility contracts.
- Review: The book is a comprehensive and well-versed reference for the theoretical pricing model and trading volatility strategies. The figures and tables complement the explanations, and the complexity of the mathematical models is simplified. It is also a recommended read for students and practitioners as it is practical and filled with examples. However, the theoretical values featured in the book do not reflect market data. It also uses hypothetical information.
- Author: Sheldon Natenberg is an author and a teacher on options. He has been a trader of equity options and commodity options at the Chicago Board Options Exchange and at the Chicago Board of Trade, respectively. He is also a part of the education team at Chicago Trading Company since 2000. His other published books include Basic Option Volatility Strategies and Mastering Option Trading Volatility.
- Pages: 592
- Publisher: McGraw-Hill Education (November 21, 2014)
4. Trading Options Greeks: How Time, Volatility, and Other Pricing Factors Drive Profits (By Dan Passarelli)
Passarelli’s Trading Options Greeks guides both advanced and novice traders by offering the practical approach for option valuation and trading. The applications of the essential greeks are explained thoroughly with the use of charts and examples. The proper use of the greeks, such as delta, gamma, and theta, leads to options opportunities, as discussed by the book.
The book presents that the greeks facilitate trading techniques resulting in profit or change in interest values. Thus, the book offers explanations on spreads, trading volatility, put-call parity and synthetic options, and advanced option trading. Furthermore, it tackles how to take advantage of the processes of option pricing.
- Review: The book is a definitive guide for inexperienced investors and helps them master the use of the greeks for better trading. The author also offers his personal experiences, which are valuable insights about the market. It provides a significant edge for the readers who want to elevate their trading game. However, this book starts from intermediate and progresses to the advanced level. It also requires effort and patience since it is accompanied by mathematical explanations.
- Author: Dan Passarelli is an author and a veteran trader. He is a former member of the Chicago Board Options Exchange (CBOE) and CME Group and the founder of Market Taker Mentoring LLC. He started as an equity options trader and agricultural options and futures trader. He has taught option trading strategies at the CBOE’s Options Institute and at the Options Industry Council (OIC).
- Pages: 368
- Publisher: Bloomberg Press (October 2, 2012)
5. The Bible of Options Strategies: The Definitive Guide for Practical Trading and Strategies (By Guy Cohen)
Cohen’s The Bible of Options Strategies simplifies the complications of options. It is a helpful reference since it has an organized approach in explaining the effective strategies for options trading. The book guides its readers in using the optimal strategy for the trading environment and reaching their goals.
The book features a comprehensive overview of basic strategies, income strategies, vertical spreads, volatility strategies, sideways strategies, leveraged strategies, and synthetic strategies. Furthermore, there is an added chapter about tax-saving information.
- Review: This book provides multi-tables of contents designed to conveniently help the readers on choosing the right strategy. The strategies are also showed in a modular format, which makes the book more navigable. Furthermore, over 50 option trade types are explained thoroughly, which are information advantage in the financial market. It also labels the strategies suitable for inexperienced, intermediate, and professional traders. The author further explains the risks and rewards per strategy. The back appendix provides a tabular summary of all the options strategies accompanied by illustrations. However, the book has less discussion on minimizing losses.
- Author: Guy Cohen is an expert options trader, a financial innovator, and the creator of OVI Indicator. He earned his MBA in finance at City University (Cass) Business School, London, specializing in stocks and options analysis. Cohen also researched options data analysis for The International Securities Exchange (ISE). Other best-selling books of Cohen include Options Made Easy, Volatile Markets Made Easy, and The Insider Edge.
- Pages: 400
- Publisher: FT Press (April 17, 2005)
Find these best books about options trading for your library and learn from the financial expertise of Lawrence G. McMillan, Michael Sincere, Sheldon Natenberg, Dan Passarelli, and Guy Cohen.
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