The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets
$13.11
The Volatility Edge in Options Trading introduces a charting technique that is designed to help option traders visualize price change behavior. Although the form is new, the underlying mathematics are that of standard option-pricing theory.
Introduction:
The Volatility Edge in Options Trading is written for experienced equity and index option traders who are interested in exploring new technical strategies and analytical techniques. Many fine texts have been written on the subject, each targeted at a different level of technical proficiency. They range from overviews of basic options positions to graduate-level reviews of option pricing theory. Some focus on a single strategy, and others are broad-based. Not surprisingly, many fall into the “get rich quick” category.
Generally speaking, books that focus on trading are light on pricing theory, and books that thoroughly cover pricing theory usually are not intended as a trading guide. This book is designed to bridge the gap by marrying pricing theory to the realities of the market. Our discussion will include many topics not covered elsewhere:
- Strategies for trading the monthly options expiration cycle
- The effects of earnings announcements on options volatility and pricing
- The complex relationship between market drawdowns, volatility, and disruptions to put-call parity
- Weekend/end-of-month effects on bid-ask spreads and volatility
This book begins with an introduction to pricing theory and volatility before progressing through a series of increasingly complex types of structured trades. The chapters are designed to be read in sequence. No particular technical background is required if you start at the beginning. If you plan to study the chapters out of sequence, you should become familiar with the method for creating price spike charts that is outlined in Chapter 3. Chapter 4 contains practical trading information that is often lost to oversimplification.
Chapters 5 and 6 present a broad review of structured positions. Beginners will learn to create mathematically sound trades using a variety of pricing strategies. Chapters 7 and 8 present new information not found anywhere else. The strategies revealed in these discussions leverage price distortions that are normally associated with earnings and options expiration. Chapter 9 was written for the large and growing population of traders who want to optimize their use of online data services.
Contents:
- Fundamentals of Option Pricing
- Volatility
- General Considerations
- Managing Basic Option Positions
- Managing Complex Positions
- Trading the Earnings Cycle
- Trading the Expiration Cycle
- Building a Toolset
The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets By Jeff Augen pdf
| Author(s) | |
|---|---|
| Pages | 299 |
| Format | |
| Publication Year | 2008 |
12 reviews for The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets
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Emmaline Cross (verified owner) –
Excellent book. Goes really in-depth on options trading. Good insight and relevant examples are common. Definitely a good book for intermediate traders.
Nicholas McPherson (verified owner) –
I was looking for something more in-depth than the introductory text on options. Augen covers the basics of options and shares some of thoughts. None of those insights are anything you could easily incorporate into a model. His last chapter on data mining and infrastructure is useless. For instance, he offers that you should make sure you clean your data. Thanks! He says data mining is important but hardly gives any advice on what to be on the look out for nor particular data mining techniques. He doesn’t even give any recommendations based on the software he uses.
Preston Ross (verified owner) –
Defiantly a unique read that throws up interesting ideas which I will continue to explore. Too many novice books on options, pleased to see a book with some meat.
Fabian Townsend (verified owner) –
Overall I would say that the book is very good, taking a quantitative approach to trading volatility and moreover a data driven approach. On this front, I would say the book excelled. Where I found the book to be very vague was in the data and infrastructure section. I felt the topic was covered very superficially while omitting the detail I was looking for. Having said that, I completely enjoyed the book and feel that it has enhanced my understanding of the this style of trading options.
Kayden Martin (verified owner) –
Good book if you want to go deeper into understanding how options work. However this book is in no way for the beginner options trader
Kristian Sheppard (verified owner) –
An ok book. I should mention one of the strategies doesn’t work. Capturing profit from the rise in options volatility as a stock comes close to earnings announcements is not a workable strategy. I tracked option prices on 20 stocks that demonstrated significant increases in volatility historically when nearing earnings announcements. Not one increased in price as implied volatility predictably rose. Capturing the collapse of options after the announcement by writing strangles does work more times than not, however as the author correctly pointed out…a loss can be catastrophic.
Khloe Foster (verified owner) –
I like the charts and illustrations. This is certainly written for options professionals and not beginner option traders. If you are experience I certainly recommend.
Mila McIntosh (verified owner) –
very very technical, have traded options for years but was still difficult for me to clearly understand. I think only the advanced option trader should tread here
Charley Matthews (verified owner) –
I own everything Jeff Augen ever wrote. The markets never change; yet they are constantly changing. They always come back around, yet they never come back around the same way. If you want to be able to see through, you read Jeff Augen’s stuff. Over and over and over again. It will be valuable a hundred years from now.
Azalea Davenport (verified owner) –
this book should be priced by it’s weight In diamonds, the author is pretty much showing you how to make 100% a month or more, he is mouth feeding you, I read it like 5 times and every time I find another hidden gem, but you need to have a solid basic understanding of options trading, I wonder if I would ever have the pleasure of talking to Mr. AUGEN. This man is putting in your hands years of trial and error for the price of a steak in your average restaurant.
Veda Gray (verified owner) –
Excellent information. Though a little dated now, it still provides enough insight to be useful to intermediate and advanced options traders
Dariel Yates (verified owner) –
Most stock and options books are completely useless, even the classics increasingly don’t apply to the modern algo-driven market. For options students that have moved beyond the basics, this book is packed with great information on volatility and it is definitely worth reading. Yes we all know what a straddle is, but how is it actually used by professional daytraders in the modern market? Unlike the vast majority of option books out there, Mr. Augen actually details a handful of excellent, real-life strategies for volatility trading.
Perfect example of why this book is superior. Holding long options until expiration is often a terrible plan, so why do 95% of option books just assume that’s what you’ll do? However, day/swing traders will appreciate that Mr. Augen is breaking down some complicated multi-leg trades on a day by day basis.
You don’t have to get mired in all the black-scholes discussion if you don’t want to. The book is complicated but well written, readers should have a firm grasp of options basics. All of Mr. Augen’s books make a similar argument, this one is the best, but I’d also recommend his Workbook for those looking to challenge themselves.
For ThinkOrSwim fans, googling “Jeff Augen thinkscript” will turn up code that accurately recreates the volatility studies he uses in the book, so you too can get your strangle on without a math degree.
Strongly recommended.