Best-selling Options Trading Books

If you are at the beginning of your trading days and ask yourself: “What are the best books on options trading?” you have taken the right approach towards trading. Reading a book prevents you from reinventing the wheel or making the mistakes you can avoid. Best trading books show you that some of the ideas that you deem genuine are not, in fact, as genuine as you thought. There is a famous quote by Abraham Lincoln: “Books serve to show a man that those original thoughts of his aren’t very new after all”. Like any other profession, you need to acquire a great degree of skills before starting to trade. But the good news is that books offer at least a little to everyone.

Introduction

This article seeks to introduce a few of the most renowned trading books that can assist you in comprehending the principles behind trading financial products. These books provide invaluable insights and useful tactics to navigate the complex world of options trading, whether you’re an inexperienced investor hoping to improve your knowledge or a seasoned trader looking to hone your skills. They explore different facets of trading, such as technical analysis, fundamental analysis, risk management, and market psychology, using in-depth explanations and real-world examples.

Best Options Trading Books

There are many books on options trading available on the market. But time is precious, and you cannot afford to spend it on books that do not help you in your options trading journey. So, we prepared a list of bestsellers and sorted them on the level of difficulty for you. The following list introduces 11 books on options trading. Number 1 is the best book to start with if you have little knowledge of the options market, and number 11 is the most advanced one, suitable for professional options investors. However, this order is not textbook. So, you can adjust the order based on your own preferences and knowledge level. Following the list, we collected some reviews to help you choose the right book.

• The Options Playbook Features 40 strategies for bulls, bears, rookies, all-stars and everyone in between
• Simple Steps to Option Trading Success
• The Rookie’s Guide to Options: The Beginner’s Handbook of Trading Equity Options
• Options as a Strategic Investment
• Option Volatility and Pricing: Advanced Trading Strategies and Techniques
• Options Trading for the Conservative Investor
• Trading Options for Dummies (For Dummies (Business & Personal Finance))
• Trading Options Greeks: How Time, Volatility, and Other Pricing Factors Drive Profits
• Options Volatility Trading: Strategies for Profiting from Market Swings
• The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets
• Bible of Options Strategies, The: The Definitive Guide for Practical Trading Strategies

The Options Playbook, Featuring 40 strategies for bulls, bears, rookies, all-stars and everyone in between (Goodreads: 3.7/5)

Ally Invest published Brian Overby’s Options Playbook in 2009 to make it one of the best-selling books on options trading. This book is also short, with 158 pages, priced at about $33. The book includes a Rookie’s Corner that explains the options trading terminology, basic concepts, and common beginner mistakes to avoid. The author elaborates on implied volatility for more professional traders and explains how it can determine the “potential range of the stock over the options life”. The book also explains factors related to risk management (Greeks) and other essential elements of options trading, such as time decay. Overall, the book is quite handy and helps you put what you learn theory into practice using plain English.

As the title suggests, the book has a little bit of everything for everyone. By reading the book, you get to know various options trading strategies and choose the one that suits you the best. Of course, there is no such thing as the best strategy, and you need to merge different features of various strategies to come up with a fully personalised trading strategy.

Simple Steps to Option Trading Success (Goodreads: 4/5)

This is a rather short book (112 pages) by Jim Graham and Steve Lentz, written especially for novice options traders. The book was published in 2003, and you can buy it for $13. Jim and Steve have taken a digital approach to options trading. They explained the strategies and software applications required to make options trading a successful experience. The book analyzes options trading from three facets. The first facet is about using options to speculate the market to make profits. The second approach regards options trading as a source of income and investment return enhancements. And finally, in the third approach, the authors elaborate on how options can hedge the traders’ investments against market fluctuations.

The book uses simple language and breaks the options trading concepts into small, comprehensible pieces. The book helps you set achievable goals by integrating the new trading software, which accelerates and facilitates trading and minimizes calculation errors. Therefore, regarding the book’s size and language, it can be the first stop for new options traders. Also, advanced traders can use the book to refresh their understanding of options trading and look at it from a different perspective.

The Rookie’s Guide to Options: The Beginner’s Handbook of Trading Equity Options (Goodreads: 3.9/5)

Mark Wolfinger began his career in options trading as a market maker in CBOE in 1977. He has written 13 books on options trading for beginners and holds individual and group seminars on the subject. The Rookie’s Guide to Options is his best-received book. It is rather long (400 pages), but you do not need to memorize the text as the content of the book is “plain common-sense ideas”. The book explains not only how to open profitable trades but also how to manage and close them. Moreover, the book follows a logical order, and the reader needs to study the book from the beginning since the concepts in later chapters require the comprehension of the ones in the previous chapters.

To name a few of the book’s concepts, we can point to opening positions with limited risk but high returns and why buying options for speculation is totally risky for most investors, especially novice options traders. Additionally, the author talks about some of his favourite trading strategies, including selling cash-secured puts, covered call writing, collars, iron condors, credit spreads, calendar spreads, and diagonal spreads. We should note that the author has been quite humble with the title. While the book is suitable for novice traders, intermediate traders can also learn a lot from it. Therefore, readers should invest more time in this book than the former ones.

Options as a Strategic Investment (Goodreads: 4.2/5)

Lawrence G. McMillan wrote the book in 1072 pages, and the fifth edition of the book is available at $70. The book elaborates on innovative techniques and business-tested tactics to invest in the options market and includes concepts such as trading strategies for Long Term Equity Anticipation Securities (LEAPS), neutral trading, meticulous details on investing in Preferred Equity Redemption Cumulative Stocks (PERCS), hedging your investments with common and regular options, comprehensive overview of the futures market, and detailed examples, figures, and checklists to visualize the concepts. This book is not proper for beginners and requires some familiarity with the options market.

According to the reviews, most of the fifth edition covers the information mentioned in the fourth and earlier editions. What distinguishes the fifth edition is the mathematical applications that shed light on the theoretical underpinnings of options trading and an extended explanation of volatility. Based on another review, this book is geared towards investing with options and does not tell you how to start trading options from day 1. Nonetheless, it exhaustively explains the trading process and elaborates on different kinds of call/put combinations and how to use them should the market move against you. In short, the book does not give you a fish; it teaches you how to fish.

Option Volatility and Pricing: Advanced Trading Strategies and Techniques (Goodreads: 4.2/5)

Options Volatility and Pricing has made its author, Sheldon Natenberg, a renowned figure in the options industry. Unlike the previous books introduced so far, the target audience of this book is advanced and professional options traders. So, if you are taking your very first steps in options trading, starting with this book is not a good idea since the book’s rather advanced concepts might confuse and demotivate you. The book covers a vast number of concepts in options trading, including the foundations of option theory, dynamic hedging, volatility and directional trading strategies, risk analysis, position management, stock index futures and options, volatility contracts, etc.

According to the readers’ reviews, of the book covers basic concepts in options trading, and the rest covers the “good stuff”, meaning how dynamic options are and how to reduce the risk level in your trades. Another review referred to the book as the “bible” of implied volatility in options trading. The same review describes the language of the book as “dry” but also admits that the author has no difficulty in communicating the knowledge. On the whole, the readers have a positive attitude towards the book, but their comments imply that to get the most out of this book, you need to have a prior basic understanding of how the options market works. To read a more detailed review of the book, click here.

Options Trading for the Conservative Investor (Goodreads: 3.3/5)

Options Trading for the Conservative Investor by Michael C. Thomsett provides essential guidelines for conservative investors, addressing often overlooked issues in 252 pages ($31). Endorsed by experts, the book demonstrates how conservative investors can utilize option strategies for income generation, protecting stock holdings, and as substitutes for stocks. Thomsett’s lucid guide emphasizes the need for good returns while approaching options trading conservatively, with real examples provided. The book introduces new downside protection strategies, detailed examples, and step-by-step techniques suitable for experienced investors, including those without options and experience. Thomsett’s expertise and bestselling author status make this book a valuable resource for diligent investors in today’s volatile market environment. The author presents 12 carefully selected options strategies that, when implemented, can significantly enhance overall returns while effectively managing risks within personal limits.

The book has received many good reviews, but some readers criticize the book for its repetitive writing style. But for another reviewer, it has been a positive point since the repetitions help them to internalize the concepts. After all, conservative investors like to double-check as they are engaged in learning about the options market. Moreover, as the title suggests, the book is not suitable for all readers and aims to provide guidelines for investors with lower risk tolerance.

Trading Options for Dummies (For Dummies (Business & Personal Finance)) (Goodreads: 3.6)

Trading Options for Dummies by Joe Duarte is a helpful guide for investors who want to trade options. The book has updated information, charts, and strategies to make options trading easier (416 pages, $18). It teaches readers how to choose the right options for their investment goals, understand the costs and benefits, and create strategies that work. The book also shows how to use options to diversify retirement portfolios with different types of investments.

Options trading can be better than buying stocks because it’s more flexible and costs less. This guide is great for people with little knowledge about trading who want to learn more about managing risks, trying new techniques, and making more money in the options market. Whether you want to protect your investments, make extra income, buy stocks at lower prices, or benefit from price changes without owning the stocks, this book gives expert advice and helpful tips for successful options trading and managing risks.

Based on the reviews, the general attitude towards the book is mostly positive, with some considerations. Some reviews point to the book’s difficulty but deem it worthwhile, emphasizing the complexity and risks inherent in options trading. Another comment highlights the book’s value in providing new insights and strategies, particularly for new and intermediate traders. The next reviewer acknowledges that the book covers the basics of options trading but suggests that beginners to investing may require prior market knowledge. Overall, the comments indicate that the book is appreciated for its depth of information and its ability to enhance confidence in options trading. While it may pose challenges for beginners, it offers valuable insights for traders seeking to expand their understanding and refine their strategies.

Trading Options Greeks: How Time, Volatility, and Other Pricing Factors Drive Profits (Goodreads: 4.3/5)

In the Second Edition of “Trading Options Greeks,” Dan Pasarelli, a seasoned options trader, provides valuable insights and fresh perspectives on using the Greeks (delta, gamma, theta, vega, and rho) to navigate the dynamic options market (368 pages valued $54). This book serves as an essential guide for both professional and aspiring traders, explaining the Greeks in a straightforward and accessible manner. Pasarelli demonstrates how these techniques can be effectively applied to trading strategies aimed at profiting from volatility, time decay, and interest rate changes. The updated edition includes new material, covering topics such as spreads, put-call parity, synthetic options, trading volatility, and advanced option trading. By understanding and correctly utilizing the Greeks, traders can enhance their pricing accuracy, improve their trading decisions, and uncover various trading opportunities. “Trading Options Greeks, Second Edition” equips readers with the knowledge and tools necessary for long-term success in options trading.

Reviewers share their experiences with learning options trading and express how Dan Passarelli’s book on the option Greeks has helped them understand and manage their trades more effectively. They discuss the limitations of measuring risk solely based on absolute risk and highlight the significance of day-to-day incremental risk. Moreover, they point to specific concepts they have learned, including delta for profit-taking or cutting losses, calculating delta based on gamma, using vega to predict trade outcomes with changes in volatility, and the importance of considering time decay (theta) in trade management. They appreciate Passarelli’s ability to explain advanced concepts with real-life examples, making the book suitable for both novice and advanced traders.

Options Volatility Trading: Strategies for Profiting from Market Swings (Goodreads: 4.1\5)

Adam Warner wrote the book to provide a comprehensive guide that aims to debunk common misconceptions about volatility trading while providing strategies for effectively managing options trading accounts and investment portfolios (304 pages, $50). The book explores the volatility index (VIX) and demonstrates how it can be used alongside other analytical tools to gauge investor sentiment accurately. It delves into historical volatility patterns, behavioural psychology in trading volatility, and market noise that can distort exploitable opportunities. Author Adam Warner covers options Greeks, laying the foundation for advanced options and volatility concepts, and highlights the use of exchange-traded funds (ETFs) as trading vehicles. By applying the lessons from the book, readers can gain the skills to analyze and interpret market data, develop effective strategies, and profit from shifts in investor sentiment. “Options Volatility Trading” serves as a reliable resource for becoming a successful volatility trader in options and other markets.

The reviewers have differing ideas about the book. On the one hand, professional traders appreciate the author’s expertise in options trading and mastering volatility, regardless of the book’s language. On the other hand, less experienced investors and novice traders criticize the book for its complicated language, writing style and incoherence. Another discouraging review was that the book provided little value and failed to enrich the reader’s current knowledge of options trading. Overall, the comments reveal a range of opinions, with one emphasizing the book’s value and the others highlighting issues related to writing style and usefulness for novice traders. The contrasting ideas show that the book is not suitable for beginners and even intermediate options investors. Therefore, only professional and expert options traders can benefit from the book. p beyond the reviewer’s existing knowledge.

The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets (Goodreads: 3.9)

The Volatility Edge in Options Trading (280 pages, $40) by Jeff Augen offers unique and practical strategies for options trading backed by extensive research and years of experience. The book has received positive reviews from professionals and experts in the finance industry, with endorsements emphasizing the value of Jeff’s insights and the applicability of his trading strategies in various market conditions. The book delves into analyzing price distortions resulting from changes in market volatility, providing analytical techniques to mitigate risk, structure high-return options positions, and limit exposure. Augen covers a wide range of topics, including exploiting volatility before earnings releases, leveraging put-call price disparities, and using options on the CBOE Volatility Index (VIX) as a hedge. The book distinguishes itself by offering practical guidance based on real market dynamics and encourages readers to build their own customized analytical tools using cost-effective desktop software and data sources.

An enthusiastic review of the book highlights its exceptional qualities; the reviewer identifies three key reasons why the book stands out among others in the field, including clear descriptions of several trading strategies, the introduction of a unique charting technique for visual evaluation of stock price performance, and the presentation of numerous insightful concepts not commonly found in other resources. Chapters 3 to 8 cover topics such as volatility analysis, bid-ask spreads, price reversals, synthetic stock trading, diagonal spreads, trading around earnings announcements, and options expiration trading. The reviewer praises the book’s conciseness, mathematical examples, and practical guidance. They also commend Augen’s engaging writing style. Of course, we should note that this book also is not for starters and requires some background knowledge on options trading.

Bible of Options Strategies, The: The Definitive Guide for Practical Trading Strategies (Goodreads: 4.1/5)

“The Bible of Options Strategies” by Guy Cohen is hailed as the ultimate reference for contemporary options trading. Cohen’s expertise shines through as he simplifies complex strategies like buying calls and puts, iron butterflies, and condors, making them accessible to traders of all levels. The book covers a wide range of strategies, including basic ones like buying and shorting shares and income, volatility, leveraged, sideways, and synthetic strategies (400 pages, $52). Cohen provides step-by-step guidance on when and how to use each strategy effectively while also highlighting potential risks. The book also includes valuable information on tax issues related to options trading. Considered an authoritative and comprehensive resource, “The Bible of Options Strategies” is a must-have for any serious trader, providing insights, confidence, and clarity in navigating the world of options trading.

The general attitude towards Cohen’s book is extremely positive. Reviewers highly appreciate the comprehensive coverage of various options strategies and the clear and concise explanations provided. They emphasize the book’s value as a reference guide, offering insights for traders of all levels. The book is lauded for its ability to demystify complex concepts and help readers better manage their trades. The strategies presented are seen as practical and effective, with the potential to significantly impact traders’ wealth and trading outcomes. Additionally, the book’s focus on risk management, tax considerations, and the mindset of professional trading garners praise. Reviewers consider it an essential resource for any options trader, providing the knowledge and confidence needed to navigate the financial markets successfully.

Final Words

Trading is not an easy task, and trading options is even more challenging. You need a reliable source of information to learn about the market dynamics. Books are the best source of information on any subject, and trading is no exception. This article introduced 11 books in the order of difficulty as well as a brief review of each. Of course, you can read them in any order that suits you.