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It’s easy to be intimidated by options trading, but it can be an integral part of a well-diversified portfolio. But first: an option gives an investor the opportunity to purchase an asset on a pre-agreed date and price but doesn’t require that they do so. Options can be attractive because they’re relatively low risk (if used correctly) for investors. But options trading can often be overlooked by eager investors. In fact, one survey found that only 18% of those polled regularly invested in options.
Learn more with our picks for the top books on options trading.
Best Overall: Options Trading Crash Course
Frank Richmond’s “Options Trading Crash Course” offers a comprehensive view of the options market, from the different types of trades to strategies to maximize your returns, even how to spot patterns and good investments. For beginners, it includes key definitions necessary to understand the options trading market. And it does so without jargon and with a clear-cut path to profits. And that’s what every investor really wants, isn’t it? Richmond is also the author of “Forex Trading” and “Exposing Blockchain.”
Best on Strategy: The Options Playbook
For investors who already understand the options market, but want to improve their investing strategy, Brian Overby’s “The Options Playbook” lays out the 40 most popular options strategies—and a step-by-step on how to execute them. Overby covers everything from why implied volatility matters to pricing variables, or Greeks, even time decay as it affects implied volatility. Overby is a senior options analyst at Ally Invest.
Best for Strategic Thinkers: Options as a Strategic Investment
Lawrence McMillan’s bestseller “Options as a Strategic Investment,” now in its fifth edition, is ideal for investors already familiar with the options market. As such, it offers a comprehensive take on the various strategies investors can incorporate when investing in the options market. Among the topics covered are the newest, market-tested tools for increasing returns and downsizing risk in the options market, strategies when buying and selling Long Term Equity Anticipation Securities (LEAPS), neutral trading, investing in Preferred Equity Redemption Cumulative Stocks (PERCS), plus futures and futures options. McMillan has also written “McMillan On Options” and “Profit With Options” and writes the daily advisory service, Daily Volume Alerts.
Related: The Best Investing Books
Best for Advanced Traders: Option Volatility and Pricing
Often doled out as required reading for those in the field, Sheldon Natenberg’s “Option Volatility and Pricing” is a solid choice for both amateur and professional traders looking for success in the options market. This expanded second edition includes valuable information on option theory, dynamic hedging, volatility, risk analysis, position management, and stock index futures and options, making for a perfect read on both strategy and risk management. Natenberg is a former trader, author, and options lecturer. He’s also a member of the education team at Chicago Trading Company.
Related: The Best Commodity Trading Books
Best for Professionals: The Option Trader’s Hedge Fund
“The Option Trader’s Hedge Fund” shows readers how to approach options trading like a business—by setting up solid, reliable income from options trading. Authors Mark Sebastian and Dennis Chen explain how to set up a business model, setting up those income streams, and common pitfalls and troubleshooting, plus personal experience culled from their years of experience. Sebastian is the Chief Operating Officer of Option Pit Mentoring and Consulting, and Chen is the founder and Chief Investment Officer of Smart Income Partners.
Best for Beginners: Trading Options for Dummies
This pick earns its spot on our list for its commitment to the basics of any topics—in this case, the ins and outs of the options market. “Trading Options for Dummies” guides investors through choosing the right options for their portfolio, how to protect your investments from a declining market, how to increase returns on investments, even how to benefit from a security’s price fluctuation without selling. Author Joe Duarte was a biotech and healthcare analyst and is the author of "This Week in the Money" column.
Best Quick Read: The Short Book on Options
If you’re only going to read one book on options trading, let it be this one. Mark Wolfinger's “The Short Book on Options” covers not just the basics of options trading, but strategies for utilizing this sector of the market with minimal risk, of course. It’s a quick read, packed full of useful options—pun intended.
Formerly a market maker, Wolfinger is the author of three options books and operates Options for Rookies.
Best for Retirees: Covered Calls for Beginners
“Covered Calls for Beginners” from Freeman Publications looks at options trading as collecting “rental income” from securities you already own. Sound confusing? This pick covers all aspects of the options market and covered calls, from the difference between covered and uncovered calls to why you should avoid an IRA when writing covered calls, even simple strategies for choosing the right strike price. It also explains why options trading might just be the perfect retirement hobby. Yes, really.
Frank Richmond’s “Options Trading Crash Course” (view at Amazon) earns the top spot on our list for its jargon-free, comprehensive look at options trading and its coverage of all the basics, from the different types of trades to strategies for maximizing returns to how to spot patterns in the market and thus, solid investments.
Meet the Expert
Rachel Morgan Cautero has a master's degree in journalism from New York University and more than a decade of journalism experience, most in the personal finance sector. Most recently, she was the managing editor of DailyWorth, a finance-based media destination for women. She’s been published in SmartAsset, The Balance, The Atlantic, Life & Money, Parents, WealthRocket, and Yahoo Finance. These titles were selected based on author credentials, reader reviews, and any relevant awards.