Best Books on Derivatives Trading

Before we jump to reading about the 13 best books for derivatives trading, we must remember the words of B. B. King – “The beautiful thing about learning is that nobody can take it away from you.”

Learning about derivatives trading has been categorized as a tedious task and requires exceptional levels of dedication. But doesn’t everything seem difficult in the beginning?

It’s always about taking the first step. The rest progresses with time. So, don’t be scared to take the first step towards earning huge profits by trading in the Derivatives segment.

The first step is learning about the segment by reading the best books for derivatives trading.

Let’s dive in!

To introduce Derivatives Trading simplistically, how about we pen down its definition first?

Derivatives trading is an agreement between the buyer and seller of a financial instrument such as a commodity, equity, currency, etc. This agreement is signed before the trade is expected to be executed, i.e., the financial instrument is traded on a future date at a price decided today.

The expected date can be in the near future or for the long term. The agreement includes every small detail about the deal and is traded according to the terms and conditions agreed by both sides beforehand.

The trade is dependent on the type of derivative chosen and suits both types of traders and investors – long term and short term.

There’s no denying that this small definition hasn’t helped in demystifying this trading segment. So, why not learn derivatives trading the right way.

In the digital era, there are multiple ways to learn. You can go online and learn using mobile applications such as Stock Pathshala or read books like an old-school trader. To download the app, click here and you will be redirected to App download section.

In this blog, we will guide you about the best books for derivatives trading as the ocean of information available online is enough to drown you in deep confusion. Don’t worry, we got you covered.

Books On Derivatives Trading In India

Many people get confused between the various books on derivatives market in India as choosing the right book from thousands is a challenging task. But it can be streamlined by reading a summary of the book.

This summary or the contents of the book help in deciding if the book resolves your queries or not. 

So, without much delay, we’ll jump to the list of the best books for derivatives trading.

Derivatives: The Wild Beast of Finance | Alfred Steinherr

This book is authored by Mr. Alfred Steinherr and was published back in 1998. The author made many audacious claims about the risks and dangers of the derivatives segment in the future.

Although everyone refuted his claims, then, their biggest fears came to light when these predictions became a reality. Later, he got acknowledged for his work and this is why it is listed among the best books for derivatives trading.

Alfred is an investment banker himself. Thus, his book talks about the role the derivatives segment plays in shaping and developing a country’s economy and the global economy at large.

The book is written in a way that, on the one hand, makes it easy to understand this complicated concept and, on the other hand, has a thought-provoking effect on the reader.

A look at the Book Cover of one of the best books for derivatives trading:

Further, some essential details about the book are as follows:

 


Derivatives Demystified | Andrew M. Chisholm

Derivatives Demystified has been authored by Mr. Andrew M. Chisholm and was published back in 2010. As the name suggests, the book is a step by step guide for beginners wanting to learn derivatives trading.

The author has adopted a very accessible approach and tries to explain derivatives straightforwardly. He uses simple terms and non-complex mathematics to clear up the air of doubt.

The book’s focus on case studies, examples, and practical applications of various derivatives is the most distinguishing aspect of this book. This makes it qualified to be listed among the best books for derivatives trading.

The book attempts to build a strong foundation of concepts in the mind of the learner. This book acts as a guiding light for everyone involved in the investment market, be it a new entrant, an established investor, or a fund manager.

A look at the Book Cover of one of the best books for derivatives trading:


Further, some essential details about the book are as follows:

 


Derivatives – A Guide to Alternative Investments | David M. Weiss

The book has been authored by Mr. David M. Weiss and was published in 2014. Presently, he works at Dunbar Associates Ltd. as a source material expert, consultant, and educator.

His book is a gem as he has more than thirty years of experience in the brokerage industry. He has also authored other masterpieces like After the Trade Is Made and Financial Instruments.

He was a former vice president of global operations at Goldman Sachs and worked at the New York Stock Exchange.

The authenticity of the book is credited to the author’s experience and professional profile and is a significant reason why it is one of the best books for derivatives trading.

The book contains in-depth details of the derivatives segment. It has a structured format to clear the basic concepts and build complex aspects on the foundation of clarity.

A look at the Book Cover of one of the best books for derivatives trading:


Further, some essential details about the book are as follows:

 


Interest Rate Swaps and Other Derivatives | Howard Corb

Mr. Howard Corb has authored the book – Interest Rate Swaps and Other Derivatives, and it was published in 2012.

The author has treated all the types of derivatives comprehensively. This effort has led to making the book a source of knowledge for professionals and students attempting to learn the derivatives segment in theory and practice.

The book contains illustrative examples, rich applications and covers the broad range of products of this segment. The most intriguing aspect of this book is the conversational presentation of the content. 

Further, the book is very appealing to the students, professionals, investors, and other individuals in this field. This publication is inquisitive and acts as a reference for institutions and practitioners alike.

A look at the Book Cover of one of the best books for derivatives trading:

Further, some essential details about the book are as follows:

 


Options, Futures, and Other Derivatives | John C. Hull

This book about derivatives is authored by Mr. John C. Hull and was published in 2017. John C. Hull is a professor at the Rotman School of Management, the University of Toronto of Derivatives and Risk Management.

The book is famous as the “Bible” for Derivatives segment learners, traders, and practitioners. This title is enough to include it in the list of best books for derivatives trading.

The author has tried to bridge the gap between theory and practice in the financial instrument – derivatives. This aim is achieved by providing a careful balance of mathematical sophistication, a look at the industry, and an outstanding ancillary package.

Covering significant topics like securitization, credit crisis, overnight indexed swap, and the way commodity prices are modeled help the students and practitioners keep up with the ever-changing derivatives markets.

A look at the Book Cover of one of the best books for derivatives trading:

Further, some essential details about the book are as follows:

 


Bite The Ass Off A Bear | Garth Friesen

The book – Bite The Ass Off A Bear has been authored by Mr. Garth Friesen and was published in 2017. The author is an investment professional himself and has been a principal since 1998 in a well-known hedge fund manager at III Capital Management.

He has also served as Co-Chief Investment Officer at the same firm. Garth has featured on CNBC, Bloomberg, The Wall Street Journal, and many more. He believes that in the road to success, work ethics are equally important as the investment strategy.

The main focus of the book is on making the traders and investors realize that greed would not lead you to success but being a good team player will. It also compiles all the risks and rewards of trading in this challenging financial segment. 

Although the book is entirely based on the American markets, a diversified knowledge of the international market never hurts, right?

A look at the Book Cover of one of the best books for derivatives trading:

Further, some essential details about the book are as follows:

 


Pricing and Hedging Financial Derivatives – A Guide for Practitioners | Leonardo Marroni, Irene Perdomo

This guide for practitioners has been authored by Mr. Leonardo Marroni and Ms. Irene Perdomo and was published in 2013. The focus is on providing readers with practical approaches to pricing and hedging derivatives.

A book written by a practitioner for the practitioners is sure to deliver the best skills and knowledge essential for the traders and finance professionals to understand the minutiae of this financial instrument.

The financial crisis was the teacher to the lesson – derivatives traders and risk practitioners have an almost negligible understanding of this segment. These aspects push in the cause for listing it as one of the best books for derivatives trading.

The book is full of real-life examples that cover option payout with delta hedging, Monte Carlo procedures, common structured products payoffs, and every other important aspect.

A look at the Book Cover of one of the best books for derivatives trading:

Further, some essential details about the book are as follows:

 


An Introduction to Derivatives Securities, Financial Markets, and Risk Management | Robert Jarrow, Arkadev Chatterjea

This book on the derivatives segment has been penned by Mr. Robert Jarrow and Mr. Arkadev Chatterjea and was published in 2013. Mr. Robert is known to be one of the true titans of finance, and Mr. Arkadev is his former student.

This book is the first text by these two and has been written from scratch. It is a source of reference for every student who is willing to learn the nuances of the Derivatives segment.

Jarrow is part of the trio that developed the Heath-Jarrow-Morton Model; thus, this book encourages earners in huge numbers. The book has been structured like a novel, an accessible way to understand this complicated but important topic.

The mathematics has been presented at the right levels and is highly influenced by the current happenings of the financial market. These distinctive features add to the credibility of the book.

Also, the book features in the list of the best books on derivatives market in India.

A look at the Book Cover of one of the best books for derivatives trading:

Further, some essential details about the book are as follows:

 


Applied Quantitative Finance for Equity Derivatives | Jherek Healy

Applied Quantitative Finance for Equity Derivatives has been authored by Mr. Jherek Healy and was published in 2017. The book compiles the equity derivatives models that are extremely popular and are being used currently. 

Generally, books tend to provide readers with abstract information that might be difficult to apply practically. This book attempts to fill that gap and has the goal to transform the reader who is unfamiliar with the concept of equity derivatives and its models.

The book also covers a topic absent from most of the books in the market – Cash Dividends, which is a practical problem. Further, it talks about Dupire Local Volatility issues.

This book is a compilation of various refinements for numerical techniques that help boost accuracy. These features, in combination, make the book a highly desired one for the learners and practitioners.

A look at the Book Cover of one of the best books for derivatives trading:

Further, some essential details about the book are as follows:

 


Manufacturing and Managing Customer-Driven Derivatives | Dong Qu

This book by Dong Qu was published in 2016, and it discusses a topic that is complex for many experienced financial practitioners as well. This topic is – Customer-driven derivative products and their manufacturing process.

The book is a fantastic guide for hedge fund managers, professionals of the industry, derivatives traders, quants, structurers, risk managers, and students who want to look at the bigger picture of the topic mentioned above.

The contents are up to date concerning the knowledge and practices, and it blends the business perspectives and quantitative aspects that provide an in-depth understanding of this financial segment.

Moreover, you get to dive into the depths of structured derivatives products and examine the consequences of altering regulatory standards.

These distinguishing aspects help the book in making it to the list of best books for derivatives trading.

All in all, you get to learn about the fundamental concepts of the derivatives segment, understand their life cycle, and gain an exceptional insight into the process of handling complex derivatives products by banks.

A look at the Book Cover of one of the best books for derivatives trading:

 

Best Books On Derivatives

Further, some essential details about the book are as follows:

 


Derivatives – Theory and Practice | Keith Cuthbertson, Dirk Nitzsche, Niall O’Sullivan

The book – Derivatives theory and practice is authored by three experts in the derivatives segment – Mr. Keith Cuthbertson, Mr. Dirk Nitzsche, and Mr. Niall O’Sullivan. This piece of work was published in 2019.

As the name suggests, the book bridges the gap between the theoretical aspects of derivatives and the practical ones, keeping mathematics and statistics minimal.

It is one of the major contributors to this book being one of the best books for derivatives trading.

It is an authoritative guide in this segment. Each chapter in the book has learning objectives, details of relevant financial blogs, technical appendices, exercises, and worked examples. This information streamlines the learning process for the learner.

The contents are structured in a way that makes it extremely engaging. This aim has been achieved by adding commentaries, which teach essential points about the market in a light manner.

The main focus of the authors is to put out applications and explanations of every aspect covered. You can learn about all the real-world derivatives finances via this book.

A look at the Book Cover of one of the best books for derivatives trading:

Best Books On Derivatives

Further, some essential details about the book are as follows:

 


Derivatives Essentials – An Introduction to Forwards, Futures, Options, and Swaps | Aron Gottesman

Derivatives Essentials has been authored by Mr. Aron Gottesman and was published in 2016. The book emphasizes the mechanisms rather than the formulas.

It is accessible and is considered to be a detailed guide for the derivatives segment.

The contents are relatively straightforward in providing an in-depth understanding of the topic. This aim is achieved by using simple English explanations and these aspects contribute significantly to the book becoming one of the best books for derivatives trading.

Although the mathematical nuances have been included, the main focus is on aspects and issues important for the practitioners such as trading, sensitivities, pricing, obligations, valuation, opportunities, exposures, and many more.

The book covers all types of derivatives – Swaps, Options, Forwards, Futures, and other related products. Further, it also talks about trading strategies and practical examples that will provide the readers with an insight into the market functionalities.

This book is evident and explains the concepts of the derivatives segment practically. This practicality increases the effectiveness of the knowledge gained by the learner.

A look at the Book Cover of one of the best books for derivatives trading:

Best Books On Derivatives

Further, some essential details about the book are as follows:

 


Derivatives | Rangarajan Sundaram, Sanjiv Das

Derivatives is a book authored by Mr. Rangarajan Sundaram and Mr. Sanjiv Das published in 2015. The authors have put in efforts to explain the behind-the-scenes scenario in the derivatives segment.

They have discussed the aspects that are at work behind the formal mathematics of hedging and pricing. This distinctive information helps the book to make it to the best books for derivatives trading.

The book attempts to answer many questions like – ‘why does the Black Scholes formula have the form it does?’ to ‘how are forward prices determined’. Answers to these questions enhances the lessons learned by the readers. 

Moreover, the book is full of simple mathematical models, verbal and pictorial expositions that explain the necessary principles.

The book then proceeds to discuss the formal analysis. For elaborating on these, numerous numerical examples are used.

This book is considered to be among the best books on derivatives market in India.

A look at the Book Cover of one of the best books for derivatives trading:

Best Books on Derivatives

Further, some essential details about the book are as follows:

 


Conclusion

This list of 13 best books for derivatives trading comprises books from every genre and covers diversified aspects of this trading instrument. These books are the best and are a complete package for learning about the derivatives segment.

Lastly, this list also helped you spot some of the most famous books on derivatives market in India.

Concluding the list, the last piece of advice from us is – before you decide to jump into the risky waters of derivatives trading, study the concepts, strategies, terms, and other essential aspects in-depth.

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