Best options trading book?

Discussion in 'Options' started by TraderGreg, Jul 16, 2008.

  1. Stuart,

    Thanks for your input. Interestingly, I had stumbled upon Paul's website and was wondering about this article (or strategy) about Calendar condors.

    Does he discuss this in the book? is he talking about Double diagonal?

    Here iswhat he says:

    "I will show you my favorite way to trade this market and how some pros "tame the S&P - how they trade S&P options with tightly controlled risk and with a trade horizon of about 1 month. Retail traders like yourself can do what professionals do - Adaptive Trading for S&P 500 options. This includes S&P calendar condors, calendar butterflies and strangle swaps. This article focuses on Calendar Condors.

    Calendar Condors are suitable exclusively for the SP options market because they require tradable options in 3 or 4 different contract months on a very large underlying futures contract. This allows establishing calendar spreads and reverse calendar spreads (Calendar Condors) using options that have significant time premium.

    S&P Calendar Condors have multiple benefits:

    They don't need to be modified unless the SP futures move 5000 points. So it frees you up to focus on other things.

    They're little affected by the level of implied volatility or by expansion and contraction of implied volatility.

    Calendar condors are within reach of most accounts since required margin is only a couple thousand dollars per Condor.

    In short, the S&P Calendar Condor is a "delta neutral and vega neutral" position which gives traders a nearly perfect way to earn positive time decay with limited risk of loss from market movement or from changes in option premium levels.

    Don't confuse Calendar Condors with Dual Credit Spreads. Calendar Condors use options in multiple months whereas Dual Credit Spreads consist of options in a single month. Calendar Condors consist of calendar and reverse calendar spreads. Dual Credit spreads are, as shier name suggest, call and put vertical credit spreads. Calendar condors profit over a wide range of SP prices and are adjustable. Dual Credit Spreads profit over a narrower range and are not adjustable.
    #11     Jul 18, 2008
  2. rosy2


    agreed thats good. baird's option makert making is good too. mcmillin's book is more than 20 years old it think and dry/dull.
    #12     Jul 18, 2008
  3. temtbv


    For a "newer person" to options and as a educator/teacher myself definitely Options traders Handbook and the the next 2/3 books by A. J. Saliba I have read about 2 dozen books in the last 2 years and his by far are the best. P. S. I DONT EVEN GET A COMMISSION, or am I related ,etc. Just appreciate the clarity and degree of simplicity. McMillan is much more difficult to read and far LESS practical for a newer student of this Art/Science of Option Investing. One needs to consider , if possible, the reader, when recommending a book . Are they possibly in 5th grade options or are they working on their Options PHD so to speak. There is NO one size fits all.
    #13     Jul 18, 2008
  4. I do realize that "Options as a Strategic Investment" was written a long time ago (first edition 1986 I believe). But, the newest (fourth edition) is 2002, and there is also "McMillan on Options" which only two editions were written in 1997 and 2004.

    Any thoughts on these?


    #14     Jul 19, 2008
  5. temtbv


    Greg, Not familiar with the 1st one you mentioned. THe second one I went through at Borders a couple of Times.....I,m a little cheap NO FRUGAL !, Just thought it was a little heavy for me and I am more of a How To Investor, Show me by example , rather than here is my very detailed theories of knowledge on
    the total subject of options investing. I don,t know how much you have studied on the subject and that makes quite a difference. By the way I think I am about 18 months away as a Options Student to being proficient at options investing. A bulb LIT for me recently and I am going to concentrate on spreads exclusively and try to become a MASTER at Vertical Spreads and Calendars, really stay with them until I feel I REALLY understand THEM. This whole options thing reminds me of the story about a blind starving man who was sat down at the Kings court in India. He was given a whole roasted elephant and had No idea what an elephant was and of course could NOT SEE it ! He was also given a knife and fork and told to feast ! He STARVED. Have a Great Day and let me know how things go for you.
    #15     Jul 19, 2008
  6. drcha



    I highly recommend both of McMillan's books. It was these books that allowed me to finally make some money. One is not a repeat of the other--they contain different material.

    Options as a Strategic Investment is a tome that contains info on just about every kind of options trade. You can skip around in in, but definitely should cover the last chapter and the first six chapters. McMillan on Options is perhaps more advanced material, but it gives you the practical side of options trading, including how to select the right kinds of trades for the atmosphere the market is currently in.

    Good luck.

    #16     Dec 21, 2008
  7. "When Genius Failed". See how selling vol can wipe you out, even with a couple of Nobel Prizes.
    #17     Dec 22, 2008
  8. drcha


    It is lack of money management that wipes people out.
    #18     Dec 22, 2008
    valkyrie likes this.
  9. Options Market Making by Allen J. Baird, not just for market makers, has lots of good risk stuff.

    And of course Natenberg is the Options Bible.
    #19     Dec 29, 2008
  10. Those are the two best options books out, bar none.
    #20     Dec 29, 2008