I am interested in trying to learn the world of options trading, but the learning curve looks incredibly daunting. Just the sheer vocabulary and knowledge of basic (i.e. well-known) spread definitions and strategies that is assumed in a lot of discussions I see is mind blowing. I am wondering if there is some good resource out there (preferably in book form) that just lays out all the basics. I am not scared of a lot of math.
(standard disclaimer : I consider the money I'm putting into options trading as pretty much pure gambling, and am looking forward to the "getting kicked in the balls" experience that most people ascribe to options trading)
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I have found options a very good way to lower some risk and market pull backs on long term positions, although I like risk with calls. As Im out over a year on some things, and possibly going to push out further.
Message edited by: davef139 on 2009-09-27 18:24:04 CDT
This website may be a good start. It has a variety of educational tools. Make sure that you check out the brochure and literature section for some free, downloadable pdf's.
Options as Strategic Investment by McMillan and Option Volatility and Pricing by Natenberg should be required reading. Go and pick them up from your library.
LongDongSilver said:Options as Strategic Investment by McMillan and Option Volatility and Pricing by Natenberg should be required reading. Go and pick them up from your library.
A second vote for Options as a Strategic Investment...while the roughly 1000 pages may at first seem overwhelming, the chapter break-up is done very well and the format was fairly easy to follow. I know you said you prefer book format, but check out the Learning Center at CBOE to get some basic terminology down while waiting for your book delivery from Amazon
LongDongSilver said:Options as Strategic Investment by McMillan and Option Volatility and Pricing by Natenberg should be required reading. Go and pick them up from your library.
This is available free online if you have an account with TradeKing. It simplified things greatly to get me started with the basic idea/types of option combos. You can start with that and study advanced concepts like the statistics/greeks when you understand the basic ideas.
While options are another way for the house to take your money, they become more than that once you realize that most options expire worthless and you therefore get yourself on the right side of the trade.
Chuu said:Thanks for the info. My weekend reading list just got a bit longer.
Fourth vote for Options as a Strategic Investment - I refer to this daily when constructing spreads or determining strategies when the market moves in the wrong direction. Some of the discussion is outdated, like with the focus on commissions: back when he wrote the book ten years ago, commissions were $10 and up per contract, not 70 cents an option like with IB or $9.95 flat with Optionshouse. Also 888-OPTIONS has a series of podcasts that are very informative. Go listen to them.
cheezedawg said:While options are another way for the house to take your money, they become more than that once you realize that most options expire worthless and you therefore get yourself on the right side of the trade. Over the past couple of years, the extreme volatility meant that many more options did not expire worthless. Many people on the "right" side of the trade were wiped out.
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