Recommend Money Management book for Options Traders

Discussion in 'Options' started by hlpsg, May 13, 2008.

  1. hlpsg


    Hi, would like to hear some recommendations for what you think are the best books on money management.

    I'm looking for books that are usable for someone trading options in a delta-neutral manner, for e.g. trading iron condors.

  2. MTE


    I've never seen a book or any other material specifically on money management for iron condors or similar strategies, or for options in general for that matter.

    Overall, no matter which instrument you trade the same principles apply (don't risk too much on a single position, etc). Otherwise, I think it's up to you to develop a money management system.
  3. rosy2


  4. hlpsg


  5. Hi hlpsg
    How are things? Have you completed Dan's course? I don't see you attending the trading group meetings.
    To answer your question, there are a number of good books dealing with money management:
    1. 'Quantitative trading and money management' by Fred Gehm
    2. 'Come into my trading room' and 'Trading for a living' by Alexander Elder
    3. 'Trade your way to financial freedom' by Van K Tharp, has a chapter on money management/position sizing.
    After reading these you will have to adapt the information in them to options trading, especially Dan's methodology.
    Or you can just use Dan's portfolio allocation suggestions - they're a good starting point. Eventually you will just have to develop a system that suits you, based on your appetite for risk and your success with your trades.
  6. rosy2


    fixed odds (aka decimal odds) are just another way of quoting the odds of a match.

    so something that is 3 to 1 in fractional terms is 4.0 in decimal terms... 3/1 + 1 = 4.0
  7. hlpsg


    Rosy, thanks for the reply.

    Daddy's boy, thanks for jumping in. I don't think we ever "complete" Dan's course...:D Haven't been able to join in the live trading group meetings as my group meets at a time when I've an ongoing commitment.

    Thank you for the recommendations for the books, I'll be sure to check it out. I'm just so impressed with Kelly's formula that I'd like to dig deeper into it, I think it has a lot to offer.

    Dan's method of allocation is great, I hope to use whatever method I'm able to research within that framework. I'm continually impressed, it's like Tom S. from TOS likes to say, he knows much more than he lets on.....:D