As a trader, you may want to explore different types of investments to diversify your portfolio, so that you can expand your profit-making opportunities and reduce your risks. One of the investment options you should consider is options trading. This type of trading involves buying and selling options contracts. Although it’s somewhat similar to stock trading, it can be executed in many ways, making it a more complicated process.
To become a successful options trader, you have to overcome a relatively steep learning curve. One way to improve your options trading knowledge and skills is to read books written by accomplished traders and experts. Below is a list of the best options trading books.
The best options trading books include:
- Options as a Strategic Investment, by Lawrence G. McMillan
- Options Trading Crash Course, by Frank Richmond
- Option Volatility and Pricing, by Sheldon Natenberg
- Trading Options Greek, by Dan Passarelli
- The Option Trader’s Hedge Fund, by Mark Sebastian and Dennis A. Chen
- Option Trading in Your Spare Time, by Wendy Kirkland and Virginia McCullough
Best Books on Options Trading
Since it’s a somewhat complex form of trading, options trading can be a very risky venture for traders with little knowledge and experience. Reading a good options book enables you to understand options trading concepts and make the right decisions to maximize your gains while avoiding unnecessary risks. There are beginner and advanced options trading books to suit traders of all skill levels. Some books specifically cater to certain types of traders, such as technically minded investors and women traders. Check out this list of the best options books to find one that perfectly fits your needs and goals.
“Options as a Strategic Investment” by Lawrence G. McMillan
“Options as a Strategic Investment” is widely considered one of the top 10 options trading books on the market. Some people even regard it as the ultimate guide to options trading. This book begins with an explanation of the basics of options trading, including how it works and why you should consider going into it. Once you understand these basics, you can learn specific options trading strategies and emerging market trends that can have an impact on those strategies.
“Options as a Strategic Investment” is a great options book for both new and advanced traders. It teaches beginners to properly hedge their portfolios to manage market volatility and experienced investors to implement the right strategies to increase their returns. It’s a 1,000-page book that’s written in an easily comprehensible and digestible manner so that it appeals to all types of options traders. It also has a study guide to help you better understand different options trading concepts.
“Options Trading Crash Course” by Frank Richmond
If you’re new to options trading, “Options Trading Crash Course” is one of the best options trading book recommendations. Everything you need to know about getting started in options trading is broken down into the simplest explanations. The book gives you a step-by-step guide on how you can make a passive income from options trading.
When Frank Richmond wrote “Options Trading Crash Course,” he had the beginner in mind. Although it’s only 82 pages long, the book covers all the concepts, techniques, and precautions a new trader needs to know in order to build a solid foundation for successful options trading. Regarded as a notes guide to options trading, it’s a close companion for many investors during trading sessions.
“Option Volatility and Pricing” by Sheldon Natenberg
If you’re looking for a truly practical options trading book, you should consider reading “Option Volatility and Pricing.” As a leading authority in the world of options trading, Sheldon Natenberg seeks to help traders understand the finer details of the different strategies for trading options. Whether you’re a novice or expert options trader, you can find a lot of useful information in this book.
Besides trading strategies, “Option Volatility and Pricing” also teaches you the best practices for effective risk management. You can also learn how to evaluate markets and identify the right options to invest in. Additionally, the book has trading guides with workable examples that illustrate different options trading situations and their expected outcomes. While it takes a somewhat technical approach, the book focuses on numbers and real-life situations, making it appealing to advanced traders who are looking for a decision-making drive.
“Trading Options Greek” by Dan Passarelli
In options trading, the term “Greek” refers to a number of techniques used to evaluate the position of a given option in an effort to determine its sensitivity to price fluctuations. “Trading Options Greek” covers all the techniques used in options trading. Although it’s a more technically inclined book, it manages to explain options trading concepts and strategies in an easy-to-understand manner, making it suitable for both new and experienced traders. This book is one of the most comprehensive guides for growing your options portfolio.
“The Option Trader’s Hedge Fund” by Mark Sebastian and Dennis A. Chen
This book is arguably the best options trading book for investors seeking to build their own options trading business. It gives you valuable instructions and ideas for generating consistent cash flow from selling options. It clearly outlines a strategic business model for properly managing option sales. As its title suggests, the book’s main purpose is to teach you how to create an options-centric hedge fund.
By the time you finish reading “The Option Trader’s Hedge Fund,” you’ll also have a good understanding of the different strategies for managing risks during options trading. Mark Sebastian and Dennis A. Chen wrote this book with both novice and expert traders in mind. With their extensive expertise and experience in hedge fund management, they lay out real-world trading lessons that explain some of the practical trading steps that can help you succeed in options trading.
“Option Trading in Your Spare Time” by Wendy Kirkland and Virginia McCullough
“Options Trading in Your Spare Time” is specifically written for women traders. In general, women face many challenges as they seek to build wealth through trading and investing. For instance, they tend to earn lower salaries than men who have the same qualifications, which has a significant impact on how much they can invest. This book focuses on helping women overcome these challenges and maximize their wealth through options trading.
“Options Trading in Your Spare Time” covers a variety of options trading strategies that enable women to become profitable traders regardless of the amounts of money they’re able to invest in the beginning. In this book, women traders can learn about the different types of options trading, such as stocks and exchange-traded funds (ETFs), as well as how and where to place options in their overall investment plans.
Why You Should Read Options Trading Books
Knowledge is an invaluable tool in options trading. Whether you’re a beginner or advanced trader, you have to continually improve your knowledge in order to make sound trading decisions and generate higher returns. Reading options trading books can have a significant impact on your success as an options trader. Below is a list of reasons why you should make options books a part of your learning strategy.
- Shortening your learning curve: Options trading is a multifaceted form of trading that requires you to learn many concepts and techniques. As such, it can take a long time to master. Reading books on options trading is one of the most effective ways to understand the complexity of this form of trading. Instead of learning everything on your own, you can shorten the learning curve by getting valuable advice and tips from authors who have extensive real-world experience in options trading.
- Learning how to avoid costly mistakes: Regardless of your trading experience and skills, you’re bound to make some mistakes while trading options. Some mistakes are negligible, while others can cause you to blow up your trading account. Many options trading books show you some of the common mistakes options traders make and teach you how to avoid and fix them. By keeping these lessons in mind, you’re less likely to make bad decisions that can lead to substantial losses.
- Getting new trading ideas: Options trading is an effective way to diversify your investments because of its great versatility. Reading options trading books can help you better understand the many different ways to trade options so that you can gain more opportunities to boost your income. For instance, you can learn how to hedge your portfolio or do speculative betting.
Options trading can be very lucrative, but it’s a risky business for traders who lack knowledge and experience. Reading books on options trading is one of the most effective and quickest ways to learn how to trade options properly. It can help you understand your trading options, identify the right strategies, and minimize your risks so that you can make the right decisions to maximize your profits. If you want to improve your trading knowledge, download our free trading handbook to get expert advice and tips on how to achieve success in the stock market.