As a trader, author, etc I often get asked what are the best ‘getting started’ books on options trading.
I have literally boxes and boxes of books on options trading. The collection includes everything from the basic to the advanced to the highly specialised.
From all of this I can say there are just five books anyone should really own. Beyond this, most other books fall under the category of general interest and are superfluous to actually learning how to trade options.
So here are my top 5:
1. Options As a Strategic Investment by Larry McMillan
With 1,000 pages, this is hardly a bedtime read. It is however a fantastic reference guide. Good one to keep in the bookshelf next to the desk.
2. Options: A Complete Guide by me!
The inspiration behind writing this book came from a friend of mine who had bought a few books on options. He noted there were plenty of beginner level books (what is an option? What is call? What is leverage? – and so on). There were also plenty of specialist texts such as books on Black & Scholes and volatility trading. However there was nothing in between.
There was nothing that takes the basic concepts and applies them in real trading. There was nothing that took a beginner beyond that point of knowing a few definitions. So I wrote this book. I included a Q&A section with real trading examples. This is designed to build in your knowledge step by step.
3. Options: Trading Strategies That Work by William Eng (Edited by Daryl Guppy)
This is a really good book to learn how different various options trades trade options. Read this only once you understand the concepts from my book and you will get a lot out of this. Looking at the way different traders use options will give you perspective.
4. The New Secret: Volatility by David Caplan
This guy is fantastic. He has a really good writing style and approach to teaching. This particular book, while not longer “new” as such covers an important trading topic: volatility. The value add in this book is the last section that has special articles from other traders. As with Eng’s book, this one will give you perspective.
5. Options Volatility and Pricing: Advanced Trading Strategies and Techniques by Sheldon Natenberg
Once you able to breeze through this book, you’ll know more than enough. It is a heavy going book, but is highly regarded by private traders and instos alike.
** Other books, seminars and websites
Simply put: you don’t need them. Save some money, buy these ones and read them a few times. That said no active trader is going to have just five books to his/her name. However, once you are comfortable with the content in the above five books, the incremental value you’ll gain from similar books is small.
