Best options trading books according to redditors
We found 102 Reddit comments discussing the best options trading books. We ranked the 30 resulting products by number of redditors who mentioned them. Here are the top 20.
We found 102 Reddit comments discussing the best options trading books. We ranked the 30 resulting products by number of redditors who mentioned them. Here are the top 20.
Look to sell options only in premium rich underlyings (IV rank > 50). Sell around 45 days until expiration. Close between 25% to 50% of max profit. Make sure to roll to defend positions (look to roll around 20 DTE). Sell the 30 delta options, and look to collect 1/3 the width of a spread. If you really want to be a big dick player, beta weight your portfolio to SPY, and keep it delta neutral.
Edit: I got a lot of PMs concerning more information to this approach. Both TastyTrade and OptionAlpha are great resources to learn, and spell out this approach further. Other, more in depth, sources to consider are Option Volatility and Pricing and Options, Futures, and Other Derivatives.
So basically... You had no experience whatsoever with the stock market, during a bull market you were able to outperform the S&P by 12% or so (Accounting for leverage) and now you think you're going to do well with options?
Let me tell you a story, in Business class in High School, we had this small stock market challenge, one group in particular, from my school, with no knowledge of finance whatsoever, reached 90% gains in just a month, they followed by dropping to -10% overall. Imagine if that was a 'real' account and they had reached 90% just to start fucking with options then tank to -200% and be indebted at 15 years old, well, that's what you're doing.
Anyway, I wish you the best of luck, at least read a book about options, VERY different from stocks, here's my recommendation "Options, Futures, and Other Derivatives" by John Hull
PS: That group was my group, I did all of the trades, which were ALL on 3x leveraged ETFs, pretty wild rollercoaster of emotions when I sank from +90% to -10%, from #1 to #36,205. The reward was minimal, but my dopamine receptors were already counting the win. The people who beat us, though, were +130%, if we'd gotten our last move right (It was about the elections), we would've gone to +300%.
https://www.amazon.com/Rookies-Guide-Options-Beginners-Handbook/dp/193435404X
This goes over all of the basic trades. How to enter and exit. And how to make adjustments. It’s a little long winded but very informative.
https://www.amazon.com/Understanding-Options-2E-Michael-Sincere/dp/0071817840
This is less wordy and covers the same topics. However it is less informative than the rookie book. Probably good to start here and then read the rookie book.
First you buy:
Options Made Simple: A Beginner's Guide to Trading Options for Success
https://smile.amazon.com/gp/product/0730376370/
Options as a Strategic Investment 5th Edition
https://smile.amazon.com/gp/product/0735204659/
Then you join /r/options. Then you paper trade. Then you trade options.
If you're asking here if you're going to profit or not on a trade, do not start trading yet.
EDIT: I also found these options threads to be helpful:
https://www.reddit.com/r/options/comments/5pekf6/interested_in_becoming_an_options_trader/
https://www.reddit.com/r/options/comments/3zwx40/500_to_1000_bucks_initial_deposit_what_next/cypp8td/
Fundamentals of Options and Futures Markets by Hull.
disclaimer: Not a quant, never went to school for it nor worked in finance. I just like reading. This list is more than enough for the summer, but let me know if you want material focused on anything in particular. (Structured products, history, etc.)
> What makes you so accredited?
You didn't even graduate yet, what makes YOU so accredited?
> Have you ever taken an investments class in your life?
Nope! In my spare time, I did take some pretty good notes on this though.
> That shit isn't "simple stuff you can learn on your own",
Don't get your panties all up in a bunch just because you realize maybe the past 4 years haven't been the most productive. I could understand a regular ignoramus arguing about the history portion, but to say economics isn't relevant to investing tells me you're a solid C student. Please don't cold call me next summer.
> and thinks hes the shit
I mean, you're not wrong.
EDIT: Literally RIGHT on the /r/investing sidebar:
> Subreddits you may also enjoy
> /r/economics
LOLOLOLOLOLOLOL
EDIT 2: Hey /u/redcards, you're a fucking idiot. Same to you /u/hedgefundaspirations.
When did you guys become such cocky shits that are too good to recommend a fucking book or website to this guy?
Check out Rookie's Guide to Options first. You should have no problem writing covered calls on a stock you own right now, but must have 100 shares and plan to keep holding.
If you want a primer on 'pricing,' just know that options price is all based on volatility. If people expect high volatility (like around earnings) they will bid up prices on options, making them more expensive right before announcement. After an event like earnings, volatility drops. To make money on options, you usually have to make a correct estimate on the direction and/or volatility of the stock, depending on if you've hedged one out or not.
That guide lists some amazing books but weirdly it doesnt mention the "options Bible" which will teach You everything You look for.
Options, Futures and other financial derivatives - John Hull
https://www.amazon.com/Options-Futures-Other-Derivatives-9th/dp/0133456315
Plenty of pdfs online as well
Trading options is more complex than trading binary instruments (stocks, fx, futures, etc) as there are a lot more moving parts. Options are like ternary instruments, they allow one to profit if the underlying goes up, down, or sideways. Best way to get started is to learn what a put and a call are. Then move onto basic positions. The best approach I can recommend is to pickup a beginners book. I read this - the first version - which taught me the ropes quickly. I also picked up several other books afterwards that got into the subject on a deeper and more technical level. One of the most fascinating things I've learned so far is what implied volatility is. See another post. With IV you can work out statistically the chances of a trade profiting. Like someone else mentioned, www.tastytrade.com, a free streaming live options talk show, is based on statistical trading and not trading on fear/hope.
Traditionally, iron condors are traded with index ETF options such as the SPY or IWM. There's obviously less risk of a massive move in a short amount of time. Though black swans do exist, see 2008, euro crisis, debt ceiling, etc. If the s&p or the russel stays in your IC's range until it expires, you win. You profit on theta decay this way. Since ICs are short volatility, there was a huge drop in NFLX implied vol today -went from 70sh to 50sh. That 20 some odd point drop in IV alone amounted to over 50% of $4800. The rest was from theta decay and delta.
Understanding Options 2E https://www.amazon.com/dp/0071817840/ref=cm_sw_r_cp_api_qr.NBbF490WK3
Option Trading: Pricing and Volatility Strategies and Techniques https://www.amazon.com/dp/0470497106/ref=cm_sw_r_cp_api_Fq.NBbMR04VG1
Dynamic Hedging: Managing Vanilla and Exotic Options (Wiley Finance) https://www.amazon.com/dp/B000UG9JQA/ref=cm_sw_r_cp_api_7q.NBbS126302
no you're right. i was making a simplistic calculation on the interest.
i am familiar with options and black-scholes (i have the bible), but i just haven't fucked around with them much.
i need to read up on conv. debenture effective interest rate.
i'm assuming:
4.94/3.29 ~= 1.50, which annualized is about 22.5%, 7.1% of which is the semi-annual compounded coupon rate.
>“Get in the weeds” is exactly what I’m looking to do.
Read hull. That'll get ya properly in the weeds.
in all seriousness check these out
https://www.amazon.com/Technical-Analysis-Complete-Financial-Technicians/dp/0134137043/ref=pd_lpo_sbs_14_img_0?_encoding=UTF8&psc=1&refRID=D74P3MCZFQVYMZ4PBFT9
https://www.amazon.com/Encyclopedia-Technical-Market-Indicators-Second/dp/0070120579/ref=pd_sim_14_33?_encoding=UTF8&pd_rd_i=0070120579&pd_rd_r=WXSXAV2Q884X3RWTYDP1&pd_rd_w=uoVZY&pd_rd_wg=hgPmk&psc=1&refRID=WXSXAV2Q884X3RWTYDP1
https://www.amazon.com/Complete-Guide-Futures-Market-Fundamental/dp/111885375X/ref=sr_1_3?s=books&ie=UTF8&qid=1492128977&sr=1-3&keywords=jack+d+schwager
https://www.amazon.com/Options-Futures-Other-Derivatives-9th/dp/0133456315/ref=dp_ob_image_bk
https://www.amazon.com/Option-Volatility-Pricing-Strategies-Professional/dp/0071818774/ref=sr_1_1?s=books&ie=UTF8&qid=1492129026&sr=1-1&keywords=sheldon+natenberg+option+volatility+and+pricing
https://www.amazon.com/Bible-Options-Strategies-Definitive-Practical/dp/0133964027/ref=sr_1_1?s=books&ie=UTF8&qid=1492129036&sr=1-
I passed on the 23rd, so what exam is next? IFM? Can I skip out of order and take the short-term then the long-term? I took an MFE class using Hull's Book in 2017, but would that work for IFM?
I haven't YOLO'd since a big negative day back in 2014. My first recommendation is learn how to place stops before you're down $20k in one day!
Option Basics:
http://www.investopedia.com/university/options/
The Option Trader's Hedge Fund
http://www.amazon.com/The-Option-Traders-Hedge-Fund/dp/0132823403
Any/All of Jeffrey Augen's books:
http://www.amazon.com/Jeffrey-Augen/e/B001IGNL1K
Hello,
I'd start here..
http://www.cboe.com/ the cboe website offers free education detailing essentially everything about options, their properties, how they're priced, simple--> complex strategies.
A good book I liked was Getting started in options. The cboe website, while incredibly encompassing, is a bit a brief in their lessons(IMO). This guy offers an easy to understand intuition behind taking some of the trades. The book ranges from beginner tactics to intricate spreads/condors and such.
Id say to cap it off and give you a well rounded education, you keep this one handy Options as a strategic investment. I say this because I think the way it's setup is more of a handbook, it skimps on the details and cuts right to the schematics of each trade and how to manage.
The order of resources was deliberate, I've found when the material is too hefty from the getco it's a bit discouraging when you first start out. However, as you progress you crave more, you dive deeper and once you demonstrate some proficiency, you want to have something easy to skim through and reference just in case.
Hope that helps!
In that case, start with the famous Hull book. It requires basic mathematical foundation (i.e. intro calculus) and a bit of knowledge on probability.
Don't worry about PDEs, Monte Carlo, or anything for now. Try to understand the Hull book, which is less mathematically rigorous.
If you're still interested after that, then you can look into more advanced probability theory (via measure theory), martingales, stochastic calculus, and so forth - which requires more advanced calculus and understanding of mathematics (probably by 3rd or 4th year math if you're studying in university)
Cool, learning is good. I’m a reader, I recommend picking up a book (fairly up to date one, at least one that was written post-internet era and is still generally applicable in the way option orders work, as it’s certainly different than what a book in the 80s would have said, if there was one). Choice is up to you, search the sub for “recommend books” or something similar and you’ll see plenty of suggestions.
IF you’re a reader, I say go for a book, you’ll read when you wouldn’t be looking online. Also, a good book already sold you, you bought it, and so it pushes no agenda, and the authors is incentivized by sales to have the most informative book, especially in the current retail market where people likely put equal or greater trust in strangers’ Amazon reviews than the vestiges of how it used to be pre-amazon and yelp, ie consumer reports, industry/hobbyist magazines, and word of mouth. I don’t know who the go to for book reviews was, I’m guessing NYT always ran a book critic column, and perhaps trading mags would have reviewed some. Big, needless tangent I’m writing here, but what a change. Anyway, point being, an author should generally just be out to be helpful as good reviews will drive sales. Free books (or even worse, this “Apiary fund” which is really a ‘school’ built to sap you money. See below for a note on the subject) are.not to be trusted, the adage there’s no such thing as a free lunch is pretty much always applicable to investing. Nobody is giving away trade secrets for free.
If you are tempted by a class of some sort, ideally look for something in your town or city that does community adult education. Generally it’ll be $10-50 for this sort of thing, depending on the length. The idea being, community centers and non profits are not trying to squeeze your money, so not only is the lesson cheap, it’s centered on teaching, not selling. Many “free” classes advertised (You’ll see RE investing most commonly, though no doubt people do it for options) are really excuses to get you in a room where you feel trapped and give you the hard sell. Usually some variation of, here’s a tiny bit of info, now to get the real secrets just pay $5000 for this week course, or something similar. Avoid these like the plague, they have no wisdom to offer and just want your cash.
Similar to community adult ed, university related classes also have no hidden agenda, so if you find an options course you could audit or mmmmm or something, you could go for it. I didn’t go to business school or major in economics or anything so I don’t know if they have whole classes on options, but perhaps at least one that covers the market along with options, maybe even futures.
But time-wise, you’ll get the info quickest reading online or reading a book, and you’ll learn quickest by doing, no amount of reading will prep you or teach you as trading will. But you want at least a good background.
For books, I can only recommend from what I’ve read. I’ve read I think 4, 2 stood out:
Understanding Options Ed. 2E by Michael Sincere. It’s not a very complicated book, it’s not teaching you ICs and jade lizards, but it gets you all the basics you need to ask smart questions.
The Only Options Book You’ll Ever Need by Russell Stultz, is my favorite. It starts simple, covering everything the simpler book does, and builds on that. It’s nicely out together for progressive learning, and if you read both, the first book you could eat in a day, and by the 4th chapter or so you’ll be ready to start trading. Then keep reading, since if you go too far with zero experience it’ll not actually stick.
Or, use the help bar here and its resources, the CBOE has great online teaching resources, as does Tastytrade, and others.
Hope that helps steer you in the right direction- good luck!
https://www.amazon.com/Options-Futures-Other-Derivatives-9th/dp/0133456315
Options college courses are part of getting an MBA in Finance.
Sure, I can try to help you out. I wouldn't call myself an expert, but I've studied them and spent time at an options market-making firm on Wall Street. My education in derivatives started at university, where I took an options and derivatives class. We used John C Hull's book, Options, Futures and Other Derivaties (link is to latest, 9th edition; you can use previous editions). Incidentally, Hull is a professor at Universary of Toronto.
While employed, we used Sheldon Natenberg's Option Volatility & Pricing: Advanced Trading Strategies and Techniques. The text is on the dry-academic side but is definitely an excellent resource.
You (and others) can also check out Khan Academy's excellent introductory videos here.
I'm not sure how I'll be able to mentor you, but I'm happy to give it shot. Let me know what I can do to help you out!
I would start with this article by Mark Joshi. It's a little old (2008) but serves well as an introduction.
Now a quick disclaimer, I'm still quite junior and my work falls somewhere between the Desk/Dev roles. Based on your description you'd fall into more into the Model/Research roles. Also these are my opinions ymmv.
W.r.t general finance/economics, I dislike most finance/economics books. I would treat it more like learning a language listen to podcasts, read (good) blogs, non-academic books etc.
Here are some technical books I think are worth reading:
I like Joshi's books The Concepts and Practice of Mathematical Finance, C++ Design Patterns and Derivatives Pricing it assumes basic finace and c++.
Successful Algorithmic Trading. It's an introduction, focuses on methodology andcovers pretty much everything involved with actually designing, testing and implementing a strategy. As you don't know much finace jargon google will be your friend.
Options, Futures and Other Derivatives (Hull), or 'The bible book'. It's included in pretty much every quant finance book list, so I'll include it. My Derivatives elective (via the business school) used this. It's a solid intro, will get you conversational on the topics, and is aimed at MBAs. Read this if you have the time (~900 pages) and finished the two above books.
I started with a book (It may not have bee the greatest book, but HERE it is.)
Then I went through almost every archived webinar on the CBOE site. (I just looked for a link to provide, but I can't find it on their site anymore.) I also attended a lot of live webinars and asked a lot of questions.
What did I learn? For starters, options can make OR LOSE money quickly, so it's best to know what you're doing before you start trading. Start small.
I almost wrote out a long piece but -
Options are simple and extremely complex at the same time.
And it really depends what you want to do with them
If you are serious about learning options (and I think they are incredibly valuable) - I would strongly recommend picking up a book or three. Option for Rookies is a good start.
If you have more specific questions - I can answer.
Yeah, it’s really basic concepts that get really confusing. I’ve done a lot of reading and it’s starting to become more second nature.
This book helped me: https://www.amazon.com/Only-Options-Trading-Book-Youll/dp/1945390115/ref=nodl_
Amazon pointed out that there's a newer edition available.
You should read this - https://www.amazon.com/Understanding-Options-Michael-Sincere-ebook/dp/B006402N5K
It helped me immensely when starting to trade options.
I am guessing either earnings passed and were meh enough to not move the price so the implied volatility fell yet the price remained stagnant, or its just time decay.
I hate to be this guy but read a book you illiterate SOB. Trading stuff you have little understanding of is a great way to get wiped out quick. Just give me your money or at least let me know what underlyings you are trading so I can be on the other side of the trade.
Might as well give you a suggestion to read: https://www.amazon.com/Options-Futures-Other-Derivatives-9th/dp/0133456315/ref=sr_1_1?ie=UTF8&qid=1469304724&sr=8-1&keywords=Hull+options
Now it's been a while since I read these, and I'm not complete sure if these are the kinds of books that you're looking for, but I found them quite good:
Options, Futures, and Other Derivatives by Hull: http://amzn.com/0133456315
Investments and Portfolio Management by Bodie, Kane & Marcus: http://amzn.com/0071289143
I hope this helps!
Hull
https://www.amazon.com/gp/aw/d/0133456315/ref=mp_s_a_1_1?ie=UTF8&qid=1487271431&sr=8-1&pi=AC_SX236_SY340_FMwebp_QL65&keywords=Hull+derivatives
The first edition is from 1988, and the Amazon reviews for the second edition say that there are a lot of errors in the new version. How well does the 1988 edition hold up to current trading strategies? Or is there another newer book that you would recommend?
EDIT: Any thoughts on The Rookie's Guide to Options; 2nd edition: The Beginner's Handbook of Trading Equity Options by Mark D Wolfinger? Or Options as a Strategic Investment by Lawrence G. McMillan?
currently working through http://www.amazon.ca/gp/product/0133456315?keywords=options%20futures%20and%20other%20derivatives&qid=1454268401&ref_=sr_1_1&sr=8-1
if you're interested in derivatives.
Here are all the local Amazon links I could find:
amazon.co.uk
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It sits on our desk for reference.
http://www.amazon.ca/Options-Futures-Other-Derivatives-Edition/dp/0133456315
(for the OP)
http://www.amazon.com/Trading-Option-Greeks-Volatility-Bloomberg/dp/157660246X/ref=tmm_hrd_title_0?ie=UTF8&qid=1369601410&sr=8-2
Kind of pricey new, might be cheaper elsewhere. Could also buy used if you're not opposed to that.
Currently reading this for my derivatives class. Luckily it just became highly relevant to the job interview I have next month.
I haven't had a chance to give either a read but I've seen it recommended enough that I'll send it your way. Have you looked at either Fundamentals of Futures and Options Market or Option Volatility and Pricing: Advanced Trading Strategies and Techniques? Maybe that's the more of what you're looking for.
Options Made Simple has basic to box trades. Should be good to get you started. Blue-green book with yellow.
https://www.amazon.com/Options-Made-Simple-Beginners-Trading/dp/0730376370
Other than the books mentioned, I've found the books from this guy really smart and easy with a lot of experience in them
https://www.amazon.com/gp/aw/d/0988843919/ref=mp_s_a_1_1?ie=UTF8&qid=1483674053&sr=8-1&pi=AC_SX236_SY340_FMwebp_QL65&keywords=rookie+option&dpPl=1&dpID=51WZmVJy%2BAL&ref=plSrch
> Natenberg's book
The "advanced" one? I noticed there's a "basic" and also a "regular" version.
I read this book: http://www.amazon.com/Options-Beginner-Beyond-Opportunities-Minimize/dp/0132655683?ie=UTF8&psc=1&redirect=true&ref_=oh_aui_search_detailpage
Which left me with a feeling like I learned a bunch but it also felt academic which is why I wanted to try to go for this as a way to really cut my teeth. Do you have any book recommendations?
A Beginner's Guide to Short Term Trading: Maximize Your Profits in 3 Days to 3 Weeks
Yep. Gotta pay for those BJJ classes somehow ;)
Hull's book on derivatives.
Also, someone posted a similar topic 2 days ago. It's more related to the math/logic side of interviews, but still could be helpful.
Depends on what you're interested in -
Most of my work is in derivatives so would recommend
Those are good starter books and far, far beyond what you'll get out of all three levels of the CFA. There are much more mathematically focused books out there as well.
If you want to get mathy -
This was my first serious finance book in undergrad and I still reference it today.
Fixed Income
I'm probably least strong in the equity space but most people recommend this book (I haven't read it)
https://www.amazon.com/Only-Options-Trading-Book-Youll/dp/1945390115
I bought this book a couple years ago and i learn a lot from it and made a lot off the things I learned in that book. I would highly recommend. Depends on your level of options knowledge but im sure you will learn something.
Options. Read some books on it. I suggest this one:https://www.amazon.com/Trading-Option-Greeks-Volatility-Bloomberg/dp/157660246X/ref=sr_1_2?ie=UTF8&qid=1540750316&sr=8-2&keywords=trading+option+greeks&dpID=41Gjf7gLFQL&preST=_SY344_BO1,204,203,200_QL70_&dpSrc=srch
The book I read -> https://www.amazon.com/Covered-Calls-Made-Easy-Generate-ebook/dp/B00YBIK9P8?
Pretty expensive, so I'd recommend any older edition. But this is the same textbook I used in my Derivatives course, it's basically an industry standard.
https://www.amazon.com/Fundamentals-Futures-Options-Markets-9th/dp/0134083245/ref=dp_ob_image_bk
https://www.amazon.com/Trading-Options-Expiration-Strategies-paperback/dp/0133409031 here's more on it. When I get back from my trip, I'll order it.
There's no set price, like I said on the post, depends on the maturity, strike price, etc. There's opensource software on github that does this type of calculations as well as websites. If you wish to dive deep into the valuation of derivatives the golden standard is John C. Hull
http://www.amazon.com/Volatility-Edge-Options-Trading-Strategies/dp/0132354691
http://www.amazon.com/s/ref=nb_sb_noss_2?url=search-alias%3Dstripbooks&field-keywords=volcube
http://www.amazon.com/Complete-Guide-Option-Selling-Options/dp/0071837620/
http://www.amazon.com/Option-Traders-Hedge-Fund-Framework/dp/0132823403
Here is the desktop version of your link
Anyone trading short vol strategies through the spring probably got hit pretty bad. Long-term, it all works out. I made 20% last year but I gave about half that back in this year's unusual vol shock.
Here is a guy who has made a nice return long-term just selling SPX verticals mechanically. He does have other forms of passive income, so he diversifies outside of the options market alltogether. I have seen similar strategies on the Russel (RUT) and other variations on SPX that also test out well.
https://www.youtube.com/watch?v=8gA8lU6XUmE
Here is an ebook by a guy who made classic tastytrade style earnings trades and tracked his long-term results. Nothing really new in the book but it is nice to see real world proof that things work outside of a backtest or theory.
https://www.amazon.com/Trading-Strangles-Company-Earning-Announcements-ebook/dp/B0121L6Z36/ref=sr_1_4?s=digital-text&ie=UTF8&qid=1527426204&sr=1-4&keywords=option+earnings
This is a great book I read when getting started. If you know very little about options it's a great start. It explains everything so clearly and in simple terms with great examples. A++ would read again
A straddle doesn't guarantee a win. The underlying has to move.
​
https://www.amazon.com/Trading-Options-Expiration-Strategies-paperback/dp/0133409031/ref=sr_1_1?keywords=options+expiration&qid=1555222318&s=gateway&sr=8-1