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My Options Reading List by Mark Sebastian

by Administrator on 11-16-2011 03:33 PM

One of the questions I get from my option mentoring students is "What are the best books to learn options trading?" It’s a good question as there are about 1,000,000 books out there all claiming to be the best option books. The truth is, for every great options book there are about 9 or 10 that are total pieces of junk. So I thought today, I might write up my reading list.   This list is how I would progress through the process of becoming a somewhat advanced option trader:

 

Category 1: The Starter

Options for Rookies by Mark D. Wolfinger:   Yes he is a little irritable sometimes, but in the end the man cares about people. He wants to help new traders, and he wrote a pretty good beginner book. There are other decent rookie’s books out there as well; the Thomsett book is good as is Options for the Stock Investor by Jim Bittman.  However I want to pick one, and Mark Wolfinger’s is my choice.

 

Category 2:  Getting Ready to Start Paper Trading

Trading Options as a Professional by Jim Bittman:   more mathy than a beginner book, less mathy than an advanced book, but in the end beautifully written, highly educational and one fine book. I have yet to find an intermediate level book that is as high quality as this one. He did a masterful job. One other book that I like in this class is Options Volatility Trading by Adam Warner. This is probably one of the hardest areas to write in and both of these authors do it well.

 

Category 3:  Ready to Trade

Option Volatility and Pricing by Sheldon Natenberg: considered by most professionals to be the bible of the industry, this is the best written upper level intermediate book available in the market place. This should be on every trader’s shelf and is the closest thing to a 'text book' that is actually NOT a text book. The other great book is Larry McMillan's Options as a Strategic Investment.  Bigger and more comprehensive than Shelly’s book it is a tougher read and less contiguous as well.  This is more of a reference book than any other book out there.   If traders only buy 1 book I would make it one of these (although I would get both). 

 

 Category 4:  Advanced and Mathy

Dynamic Hedging by Nassim Taleb:   His first book was his best: much more nuts and bolts, and less preachy than his later books.  If you are looking to really understand advanced concepts of volatility this is the source to learn that knowledge. To get any deeper means you are reading a text book.  I would also suggest Jeff Augen's The Option Trader's Work Book at this level.  It will help traders know that they can apply all that they have learned.

 

Category 5: Continuing Education

Trading VIX derivatives by Russell Rhoads, if you haven’t read this book it is time to change that.  Volatility as an asset class is here to stay; traders that don’t read this are missing out.  Anything by Jeff Augen is worth a read; Charles Cottles latest book has tremendous value as well.  When my book comes out next year, it will also fit into this category.  Traders can start reading these once they have read through McMillan or Natenberg.

 

You can read more of Mark’s thoughts on the Option Pit Option Mentoring Blog

 

Mark Sebastian

http://www.optionpit.com

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Comments
by gneyman on 11-16-2011 06:31 PM
Options

and Euan Sinclair

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by Administrator on 11-17-2011 01:18 PM
Options

There are a number of good options books out there.  Mark gave you his choices, I agree with several of them.

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About the Author
  • Mr. Bittman is the author of two books, Options for the Stock Investor, (McGraw-Hill, 1996), and Trading Index Options (McGraw-Hill, 1998). He teaches courses for public and institutional investors, and he has presented several custom courses throughout the U.S., Europe, South America and Southeast Asia. In 1980 Mr. Bittman began his trading career as an equity options market maker at the Chicago Board Options Exchange. From 1983 to 1993, he was a Commodity Options Member of the Chicago Board of Trade where he traded options on financial futures and agricultural futures. Mr. Bittman received a BA, magna cum laude, from Amherst College in 1972 and an MBA from Harvard University in 1974. In addition to his responsibilities at The Options Institute, Mr. Bittman is also a member of the faculty of The Illinois Institute of Technology, where he teaches in the masters level Financial Markets and Trading Program.
  • Mr. Kearney began his long association with the CBOE when he became an independent Market Maker in early 1981. Mr. Kearney traded options full time on the trading floor until 1992 and periodically thereafter until 1996. In early 1992 he became a founding partner and Registered Options Principal of a brokerage firm based in Chicago, a member firm of the CBOE. Mr. Kearney’s responsibilities included development and implementation of hedging and trading strategies using listed options for their institutional clients as well as their retail investors. Mr. Kearney is the co-author of Understanding LEAPS®, published by McGraw-Hill, September 2002. He has been a regular contributor to many news services including Reuters, Derivatives Week, BARRON’S, CNBC, Bloomberg, Group W, The CBS Radio Network, FORTUNE, Ticker Magazine, Stock Futures and Options, BBC TV and Radio, NPR, and others. Mr. Kearney served on various committees at the CBOE, including the Arbitration Committee from 1984 to 1996. Prior to joining the CBOE Mr. Kearney was a marketing director for NCR Corporation. Mr. Kearney is a graduate of St. Mary’s University (MN), BS, 1971, and pursued his MBA at Lake Forest Graduate School of Management. In 2006 he completed a 3-year SII/SIA program at the Wharton School of the University of Pennsylvania.
  • Peter B. Lusk is an instructor at the Options Institute, the educational arm of the Chicago Board Options Exchange. He teaches option courses for public and institutional traders and has contributed educational type articles to various financial publications. Peter has spoken to thousands of investors across North America the past few years including over 200 webinars for the CBOE and member firms on trading options. He can also be seen each week on CBOE-TV with his show, Strategy of the Week. In addition to his responsibilities at the Options Institute, Peter serves as an Instructor for the Options Industry Council – an organization representing the options industry in the U.S. Prior to working at the Options Institute, Peter was a highly successful market maker for many years on the floor of the CBOE trading equity options. He was also involved in options training for new market makers at Lakota Trading in Chicago. As a professional trader, Peter enjoys sharing his knowledge of proven option strategies and risk management at the Options Institute.
  • Russell Rhoads, CFA, is an instructor with the Options Institute at the Chicago Board Options Exchange. He joined the Institute in 2008 after a career as an investment analyst and trader with a variety of firms including Highland Capital Management, Caldwell & Orkin Investment Counsel, TradeLink Securities and Millenium Management. He is a financial author and editor having contributed to multiple magazines and edited several books for Wiley publishing. In 2008 he wrote Candlestick Charting For Dummies. Since joining the Options Institute he authored Option Spread Trading: A Comprehensive Guide to Strategies and Tactics which was released in January 2011 and recently finished work on Trading VIX Derivatives: Trading and Hedging Strategies Using VIX Futures, Options, and Exchange Traded Notes which was published in August 2011. In addition to his duties for the CBOE, he instructs a graduate level options course at the University of Illinois – Chicago and acts as an instructor for the Options Industry Council. He is a double graduate of the University of Memphis with a BBA ('92) and an MS ('94) in Finance and also received a Master's Certificate in Financial Engineering from the Illinois Institute of Technology in 2003.
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