The 6 Best Books on Becoming an Options Trader

September 10, 2024

Forex Trading

However, high open interest doesn’t necessarily provide an indication that the stock will rise or fall, since for every buyer of an option, there’s a seller. In other words, just because there’s a high demand for an option, it doesn’t mean those investors are correct in their directional views of the stock. Each option contract has its own symbol, just like the underlying stock does. Options contracts on the same stock with different expiry dates have different options symbols. Options contracts allow investors to buy or sell a security at a preset price. Options derive their value from the underlying security or stock, which is why they’re considered derivatives.

In the mid-chapters, you will find ways to interpret price action using pivot points, simple moving average and exponential moving average. In the end, Ashwani talks about what should be the right psychology of a trader while participating in markets. The options market is very difficult to comprehend, especially for novice traders. To start options trading, you must build your understanding of what lies underneath the options market. In this book, the author explains various trading strategies and how you can utilize all of them to generate healthy profits. It also teaches you how to identify patterns in the market, how to recognize great investment opportunities, and how to make money out of them.

Call options with higher strike prices are almost always less expensive than lower striked calls. The reverse is true for put options—lower strike prices also translate into lower option prices. With options, the market price must cross over the strike price to be executable. For example, if a stock is currently trading at $30.00 per share and you buy a call option for $45, the option is not worth anything until the market price crosses above $45.

A wide array of factors can now have a widespread impact on the performance of the investment. An investor needs to consider all the macroeconomic factors before committing or growing option chain analysis books any investment. This guide will take a leaf from the pros and radically change the entire philosophy toward building a robust and high-yielding portfolio. Customers find the book’s content easy to understand and well-written, with one customer noting it includes proper illustrations.

Best Options Trading Books

McMillan also offers detailed advice on trading index options, trading options on futures, and measuring market volatility. It is one of the best qualitative books on options strategies, providing you with a directional view of the market. It thoroughly explains the complex options investing topics in a very simple way. It also discusses how you can construct various classic options strategies and how these options work despite market movements.

One can gain a complete understanding of how the theoretical pricing techniques are implemented in the practical models which are in use. The traders can also apply the principle of option evaluation for creating strategies that have the greatest chances of success, given a trader’s assessment of market conditions. “Option Volatility and Pricing” by Sheldon Natenberg comprehensively scrutinizes options trading strategies and the nature of options price movements. In this book on options trading, Natenberg properly explains theoretical option pricing models, brimming with examples of particular trading strategies that have surfed market conditions.

This is a great book to determine what options and strategies are right for you based on your expertise (or lack thereof).
Sincere does not disappoint when it comes to boiling down the complex and confusing options trading.
Learning the language of an option chain can help investors become more informed, which can make all the difference between making or losing money in the options markets.
Of course, some books might seem a bit dry, but they are written in a narrative format to keep you engaged and your eyes on the pages.

📆 Date: May 3-4, 2025🕛 Time: 8:30-11:30 AM EST📍 Venue: OnlineInstructor: Dheeraj Vaidya, CFA, FRM

“Understanding Options,” “Options Trading For Dummies,” and “The Ultimate Options Trading Strategy Guide for Beginners” are excellent reads with a beginner-friendly approach. These books on options trading cover essential concepts, strategies, and practical tips for those starting their options trading journey. Additionally, Merrill has explained the psychological aspects of options trading, which is critical to becoming a successful options trader.

Trading in the Zone – by Mark Douglas

However, it may not be suitable if a person is new to the stock market (in fact, options trading itself is not suitable for novice people). So it is always better to use some technical analysis concepts to decide the direction and magnitude of the underlying instrument to take the options trade (directional strategy). This book starts with an overview of definitions and what types of options (calls/puts) are suitable for various kinds of traders. But it stands out with a detailed explanation of each strategy and which kind of trader should consider any strategy.

That guaranteed profit is already built into the price of the option, and in-the-money options are always far more expensive than out of the money ones. This book teaches simple market strategies that increase the probability of winning every trade. Each chapter provides clear examples and useful definitions of important trading and market terms. The book also includes more than ninety technical charts and patterns to help you understand the market structure.

Customers find the book’s content easy to understand and well-written, with one customer noting it includes proper illustrations.
In his book, he tries to simplify the concept of options and guides your options trading journey from beginner to advanced level.
And a plan on how to recover if things don’t go according to plan; this is one feature I like.
Delta, for example, measures how sensitive the options price is to price changes in the underlying security.
Frank Richmond’s “Options Trading Crash Course” is an excellent pick if you are not entirely versed in options trading terminology.

This book is a great pick if you are looking for all strategies and concepts compiled in a single book. To make you understand the power of each technique the author has used some real-life examples. The stocks, securities, and investment instruments mentioned herein are not recommendations under SEBI (Research Analysts) Regulations, 2014.

Top reviews from United Kingdom

Options Greeks include the different parameters which affect the options premium. For example, ‘Delta’ indicates the options’ price sensitivity in relation to changes in the underlying instrument’s price. Usually, a payout diagram is mandatory to understand the various characteristics of an option strategy, and this book serves the purpose wonderfully well. Anyone can generate some constant returns every month through options if they have an open mind to understand the basics of options. Mentions of stocks or investment products are solely for informational purposes and do not constitute recommendations.

Besides, it also provides a detailed explanation of how to use this OI data to predict the important support and resistance levels and how to define different strategies using them. I’ve been an options trader for more than 20 years, and there’s nothing I love more than sharing my learnings with the greater community of traders. This book is an excellent starting point if you want to master option Greeks. For instance, Delta represents the relation of the option’s price movement with that of the underlying stock.

Readers are advised to conduct their own due diligence and seek independent financial advice before making any investment decisions. This book can be kept as a reference guide—you’ll come back to it often as you experiment with new strategies. The last price is the most recent posted trade, and the change column shows how much the last trade varied from the previous day’s closing price. Bid and ask show the prices that buyers and sellers, respectively, are willing to trade at right now. A 5-day email course with amazing tips on trading, different trading instruments, and how to finalize a trading system.