Being successful at options trading is achievable when you have the right tools. From beginners to pros, this list of top options books offers a goldmine of tips, tactics, and profitable trading strategies to make it easy to learn how to pull steady income from the options markets.
FINDING THE RIGHT OPTIONS TRADING BOOK
The best options trading book isn’t the same for everyone. When you are just starting out, getting an easy-to-understand explanation of what a Call Option is and what a Put Option is most important. But as you progress in your understanding of the options trading world, you will need a guide that walks you through concepts like calendar spreads, butterfly spreads, credit spreads, volatility, options greeks, and more.
The books listed below have already helped millions of traders become better at grabbing winning options trades and can be the ticket to your chance to get your share.
1) OPTION VOLATILITY AND PRICING BY SHELDON NATENBERG
This legendary book has been a go-to for options traders for decades. Since the value of an option contract is dependent on how much the underlying stock might move, volatility is a critical element in pricing options. This guide is the definitive work on the impact of volatility on option pricing, and while it isn’t a vacation beach read, it is mandatory to have at arm’s length for any options trader, as a reference.
Updated in a second edition, this resource covers forward pricing, theoretical pricing models, synthetics, arbitrage, the Black-Scholes Model, and a very helpful options Glossary. An extremely helpful section also covers options spreads, including explanations of straddles, strangles, butterflies, condors, diagonals, verticals, and many more.
2) TRADE LIKE CHUCK BY CHUCK HUGHES
Easy to read and understand, this bestseller is a great place to start for new options traders and an awesome refresher on advanced options trading basics and strategies for active traders. Chuck Hughes, a champion of multiple world trading competitions, details his strategy that has helped him win.
In addition to the steps and risk management techniques he used to pull in his trophies, he also guides you through the reality of trading and methods to remove the stress that can often block you from your profits. Written in an easy-to-understand style and offering actionable steps to starting, improving, and succeeding at income-generating option trading, this guide has been the launch pad for many winning traders.
His simple rules for buying and selling options shorten the learning curve dramatically and take the stress out of trading.
3) MCMILLAN ON OPTIONS BY LAWRENCE MCMILLAN
Larry McMillan is renowned for his first book, Options as a Strategic Investment, but his follow-up to that masterwork is the real gem. McMillan on Options takes the valuable academic work he offered in OSI and applies it to actual examples. Understanding when and why to use the many different options tools and strategies available puts the thoughts into action.
While some of the topics in this book are not simple, McMillan provides thorough explanations and definitions to make this guide useful to traders at all levels. Also updated, this book includes information on trading options on Exchange-Traded Funds (ETFs), option volume as an indicator, implied volatility, put-call ratios, intermarket spreads, and much more.
4) “THE COMPLETE GUIDE TO OPTION SELLING” BY JAMES CORDIER AND MICHAEL GROSS
While there are always two sides to every transaction, Cordier and Gross make the case that the sell side is the ideal place to be. Their guide takes you through the entire process, from picking the right option to sell to recommended spread strategies, and even an introduction to futures options.
A key aspect of this book is the tips on how to avoid the mistakes new options sellers make and save yourself time and money. A solid read, this book explains why, even though the concept of selling options goes against what many have been taught, success and wins come on the sale side.
5) HOW TO TRADE OPTIONS BY WENDY KIRKLAND
This is one of the best beginner books on option trading and flat out removes the intimidation many feel when getting started. Wendy Kirkland shares her personal story of how she was introduced to the options trading market at a time when her life was in financial crisis. After seeing how trading options helped her transform out of that situation, she has been dedicated to helping others learn how to achieve financial independence through options.
From what is a put and what is a call, up to who is actually on the other side of these trades, she removes the mental hurdles that scare many off from the income potential of options.
With great tutorials and even a list of her favorite and most effective indicators, it is no surprise that this book has been the gateway for many to start trading. And it doesn’t hurt that it is free.
6) TRADING OPTION GREEKS BY DAN PASSARELLI
Don’t let the title fool you. This handy book simplifies one of the most critical aspects of option trading: pricing options. The “greeks” refer to formulas used to determine the value of an option contract. By understanding these metrics, one is able to find bargains, set price targets, and avoid costly mistakes.
Passarelli outlines how many of the advantages the professional trader used to have are now available to the retail trader like yourself. While he does an excellent job of covering the basics, a few unique aspects of this book include how dividends impact option pricing, synthetic stock strategies, volatility skew and theoretical value, and the interest rate.
With years of experience as an instructor for the Chicago Board Options Exchange, Passarelli has a gift for making the complex accessible.
7) OPTIONS TRADING MADE EASY BY CHUCK HUGHES
This former fighter pilot provides one of the most simplistic and methodical guides to help beginners and options veterans maximize their trading. By walking through the ways options allow very specific risk control that is determined by market conditions before a trade is entered and how the leverage of options can get the greatest potential benefit from a smaller trading account, Hughes opens up a world of opportunities for both new and advanced trader.
Written to help beginners get started and succeed more quickly, as well as help seasoned traders discover new useful options trading strategies and tools, this is a powerful resource. He includes a step-by-step guide to placing options orders, as well as the advantages of put buying and how trading charts can be a secret weapon for individual traders.
Another great free resource, this book also covers other pricing factors, how to determine the price trend for ideal option selection, using moving averages with options to spot clear buy and sell signals, as well as on-balance volume and how it contributes to winning options trades.
Extremely readable and packed with tips you can put to work the next trading day, this is a must-have book.
8) OPTIONS TRADING FOR DUMMIES BY JOE DUARTE
If you want to start from the very beginning, this is the easy-to-read resource you want to have. Built for both experienced traders and the absolute newbie, Duarte gets you up to speed and lays out some simple but effective ways to start trading options.
With sections on how to practice trading options before you start, understanding ETFs, how to make money regardless of market direction, and much more, this guide breaks it all down.
It even includes 10 do’s and don’ts options traders need to know to provide the best chance of success.
9) UNDERSTANDING OPTIONS BY MICHAEL SINCERE
Now in its second edition, this is another start-from-the-beginning and get-you-started kind of guide. It includes some of the easiest-to-understand explanations of option trading in the first chapter, but does speed up to more complex trading strategies as you read through.
It also has a thorough section explaining covered calls, a useful way to get more out of your current investments. Like other guides, it covers credit and debit spreads, straddles and strangles, the greeks, and more advanced strategies. One unique aspect is the brief explanation of the history of the options market that highlights how relatively new options trading is.
10) FOUR BIGGEST MISTAKES IN OPTION TRADING BY JAY KAEPPEL
Many of the other options books listed cover a lot of ground. This great little guide zeroes in on just four of the common errors options traders make and how you can prevent the costly consequences they can produce. Concise and accessible, it is a great action plan to tune up your trading strategy.
It dives right into ways to increase the effectiveness of market timing, out-of-the-money options, overly complex strategies, and options selection. Highly popular, this guide continues to get a lot of attention for good reason.
11) OPTIONS AS A STRATEGIC INVESTMENT, 5TH EDITION BY LAWRENCE MCMILLAN
This book has been referred to as the “bible of options trading”. By far, one of the most comprehensive resources for options traders, many copies of this book are dog-eared and full of notes. While it leans to the academic side, it is a great go-to that should be kept in reach while multiple options trading strategies.
It is often used as an encyclopedia of options strategies and covers everything from combining calendar and ratio spreads to LEAPS options (or Long-Term Equity Anticipation Securities), buying and selling calls and puts, reverse spreads, and a long list of others.
CONCLUSION
Whether you are a beginner looking for an easy-to-understand introduction to options trading, or an experienced trader seeking to expand your knowledge and skills, this list of top options trading books offers valuable insights and strategies for all levels.
With topics ranging from basic terminology and concepts to advanced trading techniques and risk management, these books provide the tools and knowledge needed to succeed in the world of options trading.
Recent Comments