The Option Trader’s Guide to Probability, Volatility and Timing
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| Author(s) | |
|---|---|
| Pages |
283 |
| Format |
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| Published Date |
2002 |
Jay Kaeppel explains these issues in The Option Trader’s Guide to Probability, Volatility, and Timing. Kaeppel covers the basics and then goes on to teach how to trade options. And he doesn’t do it with get-rich-quick examples and hyperbole.
Introduction:
The Option Trader’s Guide to Probability, Volatility and Timing is written for people who fall into one of two categories:
1. Those who are new to option trading and looking for a good place to start
2. Those who have traded options in the past and did not achieve the type of success they had hoped to
The primary focus of this book is not to teach you about options, but rather to teach you how to successfully trade options. Having a textbook understanding of any topic is not the same thing as applying that knowledge in the real world. This book is intended to give new traders and returnees to the options market an understanding of what it takes to succeed, as well as a set of guidelines to apply in the real world of trading. Most of all, it is intended to make traders aware of the sobering realities of option trading, including the financial risks involved. No attempt is made to candy-coat the fact that garnering consistent profits in the options market over a long period is a difficult goal to achieve. A careful reading of the material in this book will give you the following:
- An introduction to the most valuable uses of options
- Basic option terminology
- Explanations of the most important concepts in option trading
- Explanations of the most useful trading strategies available
- The conditions to look for when deciding which strategy to employ
- Objective guidelines for employing each strategy
- Objective guidelines for exiting a trade at a loss
- Objective guidelines for exiting a trade at a profit
Contents:
- The Basics of Options
- Reasons to Trade Options
- Option Pricing
- Time Decay
- Volatility
- Probability
- Market Timing
- Trading Realities
- Important Concepts to Remember
- Overview of Trading Strategy Guides
- Buy a Naked Option
- Buy a Backspread
- Buy a Calendar Spread
- Buy a Straddle
- Sell a Vertical Spread
- Write a Covered Call
- Enter a Butterfly Spread
- Placing Trades
The Option Trader's Guide to Probability, Volatility and Timing By Jay Kaeppel pdf
6 reviews for The Option Trader’s Guide to Probability, Volatility and Timing
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Sevyn Morrison (verified owner) –
Straight to and through the basics. I am a rookie option trader. This book spoke to me. I have already saved more than the price of the book, using the information in it. Some of the charts though, did not speak to me. I still don’t know what a standard deviation is.
Justin Reese (verified owner) –
The good
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Explanations of the basic ideas was presented well. For example, sell options when they are expensive and buy them when they are cheap. Criteria for certain trading strategies was also clearly explained. This is not a bad book on basic options trading strategies, but I would not recommend it for anyone new to options. This book is targeted to people with some experience with options.
The bad
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This text contains some information and data that I found to have no value. And some important details were missing in other areas.
– there is a complete chapter on how to enter your trade via online or by phone (what to say on the phone to your broker to enter an order). I did not read this chapter.
– The appendix had 7 pages of AOL (America Online) option trading volume statistics from the year 2000. I have no idea why this information was included.
– After reading this book, I was left wondering how can I take action with the trading method presented in this text? E.g. where can I find Relative Volatility Ranking numbers or calculate my own? Is there a good reason to go back 2 years on IV data to calculate the Relative Volatility Index? I have accounts at several brokers – they do have analytic tools – with some proprietary software. But I was left wondering could I create my own Relative Volatility Rank numbers without being tethered to a particular broker? How can I calculate probabilities in the same manner presented in this text or where can I find them online? These important details were omitted. Yes, the basic trading method is clearly presented, but more practical details on how to implement these strategies is needed. What would really make this book better is some sample data work-ups (spreadsheet?) where easy to obtain raw data is input and the calculations shown.
– What happened to the Greeks? Delta was used sparingly (e.g. “delta neutral strategy”). I was left wondering why not some discussion of the other Greeks?
Leonard Cano (verified owner) –
This book is a collection of information that can be read anywhere; so you may as well find an author who explains the information.
Maximus Mendez (verified owner) –
The book provides more details on the in and outs of trading options. As a new trader this knowledge should improve my odds when trading
Rosemary Wilkinson (verified owner) –
I really enjoyed this book
Londyn Munoz (verified owner) –
Jay.s astonishing world view and then detailed view present here in this book. I like the humor and the feeling that he is being straight with me.
Well rounded approach