Options trading is different not necessarily difficult. And the more you read books on option trading the more you shall agree with the aforementioned sentiment.
The fear that surrounds options trading has been widely discussed by industry experts, seasoned traders, and of course the media. But people haven’t been able to crack the fact that Options trading depends on an investor’s appetite for “learn and earn”.
Therefore, your decision to build your knowledge in Options Trading instead of just giving up is a smart one. And you will find the below-compiled list of books on Option Trading helpful to understand and learn Options trading inside-out.
Also, note that all these books on Option trading are in the English language, so if you wanna know what is option trading in hindi, then you can read our blog.
Further, this list has been classified into three categories:
- Options Trading Books For Beginners
- Intermediate Options Trading Books
- Advanced Options Trading Books
So, what level do you find yourself at presently? If you aren’t sure, well that’s an indicator that you need a beginner-level text, or maybe some best stock market books on basics will help you better understand.
Or you can also subscribe to some state-of-the-art stock market courses.
Now, jump to the section you feel like and find out the books on option trading suitable under that category.
Options Trading Books For Beginners
Following is the list of three books that a beginner-level investor or trader can read before going towards more advanced concepts of the derivatives market. In general, these are the books for learning stock market even if one isn’t interested in derivatives trading.
All of these books on option trading are low on the complex jargon, hence, friendly for readers that are still getting used to the idea of the Options market.
1. The Ultimate Options Trading Strategy Guide for Beginners by Roji Abraham
To label Roji Abraham as a storyteller that also knows the stock market inside-out, one won’t be entirely wrong. That is the reason that this list of books on option trading should begin with Roji Abraham’s amusingly written guide to Options Trading.
For those who aren’t aware of Roji’s existence; Roji Abraham is a multifarious, multitalented individual who has already made it to the #1 bestseller list globally with his book: “The Ultimate Options Trading Strategy Guide for Beginners”. This book isn’t just for those concerned with Options trading. Rather, those who aren’t interested in learning better strategies can rely on this stock market strategy book.
But, of course, this book has been structured keeping in mind the ideal audience i.e. a beginner-level options trader.
Then again, what’s the reason for this book to turn into an instant bestseller?
This book attacks the whole spirit of the idea that derivatives trading such as Options, is only for experienced traders who can deal with heavy-duty complexity and the high-risk factor. Now this book won’t deny the realities but instead offers easy solutions to these troubles.
For example, the author has ensured that those looking for only smaller profit and cutting losses should be able to deduce fail-safe strategies in options trading. Simultaneously, those who have given up on options trading because of the fear of Derivatives should find this book as encouraging as it is mathematical.
Roji Abraham has put all his knowledge wealth accumulated for a long time, into designing an options trading guide book which once read should empower the mind and equip with diverse strategies, its reader so that they don’t need to look for any other resource before venturing into options trading.
2. Options Trading For Beginners by Matthew Warren Hedge
Those who don’t feel confident enough to get into Options Trading because of the whole fear that surrounds this trading segment should start learning but first reading this book by Matthew Warren Hedge.
The author has put forth a simple formulaic approach as the best one: “Stick to the basics no matter where the market is headed towards”. And the author isn’t only focused on explaining the concepts but also on how to do option trading and turn it into a livelihood.
This book gives a much-needed pathway for beginners who are often baffled by the world of Futures and Options. But the book isn’t just about those who want to begin but also about those who find themselves distressed in losses and stuck with harmful strategies.
The book makes it pretty clear that Options is not about mere speculation but serious preparation and that is the objective of both the author and the text. And to prepare a reader for Options trading, various scientific approaches have been explained by using standard examples keeping in mind the reader’s abilities and skills.
Although the topics covered have been well researched and tried and tested methodology, Matthew Warren Hedge stresses applying these approaches and practicing regularly for at least a year before trading seriously.
The chapters within cover the concepts like what does option chain indicate and all the essential beginners level options trading strategies that are comprehensible as well as implementable.
The motivational and confidence-building writing style is an addon in these important books on options trading. Apart from that, this book is an introductory text to the psychology of investing in general.
So instead of looking for too many books on options trading, just begin with this book at once. The faster you get over with his book the faster you can practice options trading vigorously.
3. Option Volatility and Pricing by Sheldon Natenberg
If some text can be referred to as the bible of Options trading for inexperienced traders it is this book by Sheldon Natenberg. At one time, this book was a compulsory read for all NYC based market maker pursues.
And the ones who have read it, keep coming back to it, just to brush up all the financial theories well-presented in this important classic. But why is it so popular among traders community world over?
The answer lies in the background of the author who, since 1982, was an independent market maker in equity options at Chicago Board Options Exchange but he quickly shifted towards options trading. And in the year 2000, he spearheaded the division of Education at the Chicago Trading Company.
With all his experience and practical skills, he wrote several books on options trading, especially for beginners. Among these books is the bestseller “Option volatility and pricing”.
Some of the essential basics of options trading such as pricing, dividends, volatility skew, implied distributions, and PCR in option chain have been thoroughly covered in this book. And once a reader is done with these concepts, the contents of the book shifts gears towards more advanced paradigms of options trading e.g. Advanced trading strategies, pricing models volatility considerations, and risk management techniques specific to options trading.
However, to some readers, this book may pose a gap between the theoretical models and the reality of options trading. But that doesn’t mean that the foundations of options trading that have been covered in this text aren’t useful.
In addition to understanding the core fundamentals of options trading, this book also helps beginner-level traders in figuring out their risk tolerance factors and a guide towards the in-depth analysis of market behaviour.
One thing is for sure that if there is among the various books on Options trading, there is just one that is both suitable for beginners and also serves as a standard in the industry.
Intermediate Options Trading Books
Once you are done with thoroughly reading the beginner-level books, you can take a leap towards slightly more sophisticated books that talk about certain specific topics within the larger model of the Options Market.
Many of these books are also enumerated as reference resources for various futures and options courses.
You will find two such books in this section that will help you take this leap steadily.
4. Options as a Strategic Investment by Lawrence McMillan
In this list of books on option trading, the oldest classic is: “Options as a Strategic Investment” written by Lawrence McMillan.
Lawrence McMillan is a well-known name in the financial world. He has been awarded the prestigious Sullivan Award for his contribution to the Options Market. That speaks a lot about his credibility as an expert author about Options trading.
This book, although very old, is still quite relevant as the practical option reading strategies defined by McMillan are timeless. Mind you, this isn’t a short concise read, the book goes beyond 1000 pages but remains engaging and interesting through and through.
The book provides new investors with a complex directional view of the market in an easy to understand explanatory structure. Furthermore, this text offers a thorough discussion of the standard option spreads in addition to the tips surrounding the adjustments that are required when the market conditions take a different turn.
With its fourth edition already on the bookstalls, the knowledge base of the book has been upgraded by adding or updating various options trading strategies that are new age and more suitable to the current conditions. This includes Long Term Equity Anticipation Securities (LEAPs), complete detail of how option selling works, as well as a detailed analysis of the impact of recent developments in the F&O market.
To conclude, this book is an essential guide for anyone who is planning on getting into Options Trading.
5. Options Volatility Trading by Adam Warner
Now for those who don’t need a primer in Options trading but have made up their mind about making a profit in Options trading and therefore are looking for books that dwell into specific areas of study within the larger framework of options, should give this book by Adam Warner a good read.
But who is this Adam Warner?
In his own words, Adam Warner is a writer/journalist who before writing classy books on options trading, was working as an independent market maker on American Stock Exchange for more than a decade. A John Hopkins University graduate, he is also the founder of the iconic “Daily Options Report”.
Readers who are fed up with boring books on Options will find his writing a fresh breath of air. The author, without cutting down on the substantive jargon has managed to get his point across to those unfamiliar with superior terminologies of Options trading.
Among its past readers, this book is particularly celebrated for its rational and illustrative account of the VIX or volatility index. So many other books that are titled around options trading deliberately leave out volatility index because of its complexity to explain in simpler terms.
While writing this crucial piece of work, the author seems to have immersed himself into the sea of historical data and patterns around the volatility of options stocks. And from this analysis, he has been able to deduce certain very crucial observations such as the relationships between SPX and VIX, or irregularity in VIX prediction.
But the book is right on the money too, wherever necessary. Precisely speaking, the book never goes out of context and is always about making more profits and cutting losses in options trading. Therefore, for slightly experienced traders this book works.
Advanced Options Trading Books
If you have reached a level in your options trading career where you are doing alright and have learnt almost everything but still aren’t able to exceed your profits post a limit, then these books will point you in the right direction.
Advanced level books are key to such situations, and these two books that we have shortlisted will enhance your knowledge and skillset so that those profits keep growing.
6. Trading Options as a Professional by James Bittman
Those looking for a guidance text to enter the arena of professional options traders should read this book by James Bittman. With a stock market experience of more than two decades, has pioneered the practical application of concepts of pricing synthetics, dividends, flying off options among several others.
Essentially Bittman comes with a motto that forms the essence of his book. This motto is “Trading Options is a Learning Process”. But what are things to be learned from this book?
Concepts as basic as using objectivity in all investment decisions, developing market prediction techniques and enhancing the trade selection procedure, have been covered in this book. These form the mantras for all professionals of the stock market regardless of their level of expertise or trading segments.
In a nutshell, what this book achieves for its readers is that it gives a clearcut idea of the difference between a trader that speculates and an investor that calculates. James Bittman has also touched on the topics of market behaviour prediction. On the serious study of these concepts of market prediction, traders of options will be able to determine price movements in the underlying as well as new overall market circumstances for a given period.
“Trading Options as a Professional” is one of those books on options trading that is sure about who should read this book. So, before going ahead with this particular book, it would be better to ask yourselves what your present level of understanding is for the derivatives market.
7. Dynamic Hedging by Nassim Nicholas Taleb
Of course, everyone knows Nassim Nicholas Taleb, the guy who wrote Black Swan, a worldwide bestseller. His philosophical thought process and style of communication of complex ideas about life and money is a benchmark in the world of English literature.
But what people aren’t aware of is that the great Nassim Taleb is at heart a trader. In fact, he has been running his investment firm even before all the limelight. And you would be astonished to know that he isn’t only writing captivating philosophical accounts, but also books on stock market trading.
Nassim Nicholas Taleb won’t write ordinary books because that doesn’t go with his whole persona. So, when he writes a book on Options trading he is straightaway hitting the advanced trading objective of hedging in Options.
This particular book is called “Dynamic Hedging”. And in his own words, this book is about hedging the risks of Options and will be helpful for Options traders or learners and risk managers.
However, Dr Taleb’s extraordinary personality does not come into the way of his writing style while communicating difficult concepts of Options trading and hedging.
Right from the beginning, the book takes on Options trading and the risks associated with hedging options position. Several tools have been reviewed by the author that is required for monitoring portfolio risks.
Soon the book moves towards advanced mathematical concepts of rebalancing the gamma and parameters or greeks of Options positions. But instead of jumping straight into advanced concepts, the primary introduction has been given to the sensitivity of the options position to changes in price, volatility, time and other factors.
Nassim Taleb has concentrated on risk management as well and has discussed the fundamental analysis risks that exist in hedging options positions and how the greek factors of options will help in managing hedge funds investment.
All in all, this text is as appealing as the name of the maestro on the cover.
If you were looking for a comprehensive list of books on option trading that is structured around the experience level of an investor, then you are going in the right direction. It is important to depend on a resource that matches your requirements and current knowledge base.
This list of books on options trading has been designed keeping in mind a varied scale of experience among the trader’s community. The authors are well-known and pioneers in this field of study.
So, shrug off all the fear about derivatives trading and start studying with all your heart and soul because sooner or later you will learn stock market and feel confident about dealing in Options Trading.
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