The Option Trader’s Guide to Probability, Volatility and Timing


  • Pages: 283
  • Format: PDF
  • 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.


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


  • 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