Contrary to popular way of sharing things that made options look very easy, I am going to share something that is NOT easy. Please don’t jump to the end of post, allow me to take you there slowly.
Today I am going to recommend something that has completely changed the way I looked at option. I am thankful to my friend Krishna S., founder of White Knight Capital who referred this amazing book to me.
Before we begin, Let me advise that DON’T READ THIS BOOK IF:
A word of caution to beginner traders, please don’t buy it yet. Test the option strategy simulator I mentioned here, understand the strategies first and only then get into details. This book in my opinion assumes that reader already knows advance stuff (may not be advance from author’s perspective)
This book will test reader’s mettle. Generally speaking, I am an avid reader and can digest financial literature like yummy sweet-n-sour soup, but this book required patience and perseverance.
This book, titled “Options Trading: The Hidden Reality”, is written by Charles M Cottle, also known as Risk doctor and has been written from Market maker’s perspective. Charles was x-floor trader. He has also written other widely popular books in the investment circle (“Coulda, woulda, shoulda” and “Option: Perception and Deception). Once one understands the concepts and knows how market makers play options trading game, it certainly gives edge to the retail investor. This book extensively covers ‘position adjustments” and “hedging” as well. Slingshot hedging is one of the best examples that I used several times to convert a losing trade into profitable one.
Charles peeled Options like onions, layer after layer and has opened the hidden reality of option trading to common retail investor. I am again mentioning that it’s a tough book but once understood, one can create his/ her own adjustment plans on a piece of paper without even looking at Option simulator. My drawing skills are not good and hence I need a simulator. Jokes apart, the book helped me visualize options and adjustments graphically inside my brain.
I am not affiliated with the author. The only reward I can expect is referral fee from Amazon should you decide to buy as a token of appreciation for my portal. Whatever mode you choose, buy it on my portal or elsewhere, or borrow it from library but always keep a pen and paper with you. Please read it like a workbook and take your own time to understand the concepts.
The book has covered literally everything, from nuts and bolts of the options to advance strategies like strangles, straddles, verticals, collars, wingspread and so on. There is a special chapter on hybrid hedging as well. The best part of the book is option dialogue, real trade examples, trader’s mistakes and risk adjustment plans suggested by Charles.
Enjoy and I wish you profitable trading,