Option Trading Books Reading List
Best options trading book
What are Some Good Books on Option Selling?
What should you do if you are interesting in learning more about option selling?
The best way to get started is to read a few good books on the subject.
When I first got started I went to an expensive seminar. After two days I knew enough about options to be dangerous – to my myself. After trying to trade options based on what I had learned at the seminar I realized, after losing a lot of money, that there was more to it.
So I started researching books on options, videos online, websites, etc. Here are some of the best books I found on options selling and trading in general.
One of the most advertised books is The Complete Guide to Options Selling: How Selling Options Can Lead to Stellar Returns in Bull and Bear Markets by James Cordier and Michael Gross. It goes into detail about option writing strategies that can improve your profit. It reviews all of the basic mechanics of selling options and profiting as well as strategies that are insider-quality, easy to follow, and that have a high-probability approach. The book is written to appeal to the new investor, not a mathematician. In this book you can look forward to learning why selling options is more profitable than buying, and specific strategies for selecting various types of markets. Keep in mind that this book is about futures options, not equity options.
One of the first books I got was Options As A Strategic Investment by Lawrence Mcmillan. I would say this is the “bible” of options books. Why? Because it is huge and covers all the basics of option trading and then some.
Most option books cover the basic strategies but they leave out when you should use these strategies and what to do when the trade goes bad. Very few books talk about adjusting trades. The best one I found that does is The Option Trader’s Handbook – Strategies and Trade Adjustments by George Jabbour and Philip Budwick.
My favorite book on Option Selling is Generate Thousands In Cash On Your Stocks Before Buying or Selling Them, by Samir Elias. I myself have only used a couple chapters of this book but it was a very interesting with good ideas.
Wall Street Money Machine by Wade Cook is also a good read. But read this book for motivation only. Most of the examples and numbers in this book were over exaggerated but still, I liked it and enjoyed it when I was starting out so you might too. Most of the book was on covered calls.
A couple other “should” read book on option volatility are Option Volatility and Pricing by Sheldon Natenberg, and The Volatility Edge in Options Trading by Jeff Augen. Both are technical and for advanced options traders.
Books On Trading
How To Trade In Stocks by Jesse Livermore is a must read. Livermore was the best stock trader of all time and his strategies are now copied by just about every firm on Wall Street.
Trade Your Way To Financial Freedom by Van Tharp is good to give you some basic guidelines on trading.
Trading For A Living by Alexander Elder is also very good. I have all of Elder’s books even though they focus a lot on technical investing, he does show how traders with different styles can all make money if they get the basics right.
I read through The Complete Guild to Option Selling back a few months ago when I started as a member of this service. One concept I learned and felt impressed from the book is to sell FAR-OUT-OF MONEY spreads which actually do not need fancy and complicated techniques.Now,the trick is how far we should look at them in terms of striking prices,especially in OG’s SPX and RUT short condor spread trades?If we initially sell two strikes out than OG suggests,we are “safer”,but a lot less ROI.let’s say 15% ROI for OG , but 8% for two more strikes out ( for instance,OG sold a credit of 1.45,and we got 0.80,).For good and safer incomes,members and OG may have more discussions about the topic.
Risk and reward comparisons always are psychological.Chasing for higher returns or for lower,but sustainable returns for long term ?
That’s a great point. I know a fellow trader who likes to do condors but wants a 90% probability of profit. That provides very little premium and his returns are about half of mine. But he also has to adjust his trades less than I do. He prefers not having to mess with his trades once he puts them on. I don’t mind adjusting every other month or so for a higher return.
It is a personal choice.
This is a great list of options trading books. Your note about McMillan’s book is right on (you mention Options as a Strategic Investment – McMillan on Options is another great example of his work).
The only thing that surprised me? You mention Wade Cook’s Wall Street Money Machine without gagging. 🙂 It sure is a motivational book (even more so if you get a copy with the audio CD, where he gets his broker on the line and initiates several trades in front of a live crowd), but it was only germane during the crazy late 90s. The claims and his thought process could get many beginning traders into trouble in today’s market.
Outside of that – great list. Every trader should read the books you mention.
Timothy (Timorous) McCready
Yeah the Wade Cook book has very few facts in it that are totally accurate. While the claims are totally outrageous, the style is simple and easy to understand.
FYI, defiant Wade Cook is due to get out of jail in Portland Oregon sometime in 2014 (for tax evasion, fraudulently selling unregistered securities, conducting illegal enterprises, and lying under oath.)
As bad as it is, Wade Cook made me so much money from $3k to $190K during the late 90’s. with no experience(just read his books and follow it verbatum. My heart goes to him. My trouble begins when I start attending expensive sexy seminars, Now I’m a consistent credit spread writer.
My favourite options trading book is
Options, Futures, and Other Derivatives and DerivaGem
It’s not cheap but money well spent.
I have more of a question:
I am fairly new to Options trading, I get ads for every corner of the universe on it.
Don’t know who to believe or follow.
Does anyone have any thoughts/comments/reviews on CHUCK HUGHES?
We do not comment on any other company. I am sure you can find good and bad about everyone. We feel we have a pretty good way to trade and have been helping folks like you for over 10 years now, which in this industry is a lifetime.