The 8 Best Books on Options Trading of 2019
Brush up on this high-risk investment strategy
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If you're looking to branch out a little in your portfolio beyond stocks, bonds, and mutual funds, options trading is something you might consider. Trading options is an alternative investment strategy that focuses on adding contracts to buy or sell a particular security to your portfolio, rather than investing in the underlying security itself. You can realize gains (or losses) when exercising options.
Options trading can be risky but also lucrative for investors who understand how it works and how to do it effectively in the market. If you're a beginner where options trading is concerned, a good place to start is with learning the basics. If you've been trading options for a while, on the other hand, you may be ready to explore more advanced techniques for investing in options. Or, you could be in the middle between being an options novice and an expert.
Wherever you are with options trading, these books are the best you can read on the subject.
Best Overall: Options as a Strategic Investment
McMillan's book on options trading is a bestseller and it's widely regarded as one of the most comprehensive guides to options on the market. It covers the fundamentals of options, how they work and why you might consider investing in them, before diving into specific options trading strategies and emerging market trends that could affect those strategies.
"Options as a Strategic Investment" is a great introduction for beginners who are interested in learning how to use options as a hedge in their portfolios to manage market volatility. It's also a must-read for more experienced investors who already understand the market. At over 1,000 pages long, it's not exactly beach reading material but it's written in a way that's digestible even for the greenest of investors. There are also study guides available if you need a little extra help wrapping your head around some of the book's concepts.
Best for Beginners: Options Trading Crash Course
If you're getting into trading options, generating some solid returns right away might be one of your biggest motivators. "Options Trading Crash Course" breaks down everything you need to know to start trading options and making an income from your investments in a simple step-by-step guide.
This book is specifically written with beginners in mind but by the time you're done reading it, you might feel like an expert. At just 82 pages, it's a pretty quick study but as the title suggests, the goal is to get you from Point A to Point B quickly so you can become an options trader. Think of it as the Cliff Notes guide to options, hitting all the key highlights that can help fuel your success. If you're already reading "Options as a Strategic Investment", this book can make a nice, lighter companion read.
Best for Learning Trading Strategy: The Options Playbook
There's more than one way to trade options and "The Options Playbook" offers pointers and advice for investors who are looking for some variety in their approach. Overby covers 40 of the most popular options trading strategies, categorizing each one as bullish, bearish or neutral, so you can decide what best fits your risk tolerance and investing objectives.
This book can offer valuable insight for new and intermediate options traders who are fine-tuning their trading skills and seeking to maximize profit potential while minimizing losses. Overby doesn't take an especially deep dive into any one strategy but overall, "The Options Playbook" is a helpful reference to have as you get comfortable with including options in your portfolio.
Best for Advanced Option Traders: Option Volatility and Pricing
This bestselling book is the one professional traders are often given to learn the finer points of options trading strategies, so it's a credible read. Even if you're not a professional trader, you can still glean plenty of useful information from its pages, including how to manage risk effectively with options trading and how to evaluate options to determine which ones are most likely to perform on par with your expectations, as well as those of the market.
It's an excellent pick for investors who prefer having examples and models to demonstrate different outcome scenarios before making a move. Though it could be considered more of a technical read owing to its heavy focus on numbers, it may appeal to more advanced options investors who are looking for a firm theoretical grounding to drive decision-making.
Best for Women: Option Trading in Your Spare Time
Women often face some unique challenges with investing and building wealth. The gender pay gap, for instance, means women earn less compared to men, which can impact how much they have to invest. And women may spend time away from the workforce to act as caregivers for young children or aging parents. "Option Trading in Your Spare Time" is written specifically with women and their wealth-building goals in mind.
Authors Kirkland and McCullough offer strategies and advice on how women can be successful with options trading, even if they don't have a lot of money to invest in it to start. The book covers different types of options trading, including stocks and exchange-traded funds, with charts and examples included to provide context.
This one is good for women who are starting a portfolio or are already in the process of building one and are curious about where options might belong in their investment plans.
Best on Options Greeks: Trading Options Greeks
In a trading context, the term "Greeks" refers to various techniques that are used to evaluate an option's position and determine how sensitive is to price fluctuations. Delta, for instance, measures an option's price sensitivity in relation to changes in the price of the underlying stock or fund. Vega, gamma, theta and rho round out the options Greeks.
If all of that is Greek to you, then "Trading Options Greeks" is one book you'll want to add to your reading list. Author Dan Passarelli walks you through each of these techniques, explaining them in a way that's easy to understand. Like Natenberg's book, it leans more heavily toward the technical side but it's one that may be appreciated by experienced options traders who are ready to elevate their portfolios.
Best on Binary Options Trading: Binary Options Trading
Binary options trading is an options strategy that utilizes a fairly simple precept. It's all about anticipating whether an underlying asset will rise above a certain price point, at a certain time. It sounds easy enough but trading binary options effectively is something of an art and while the rewards can be great, so can the risks. John Reigner's book lays it all out for investors who are interested in charting the binary options path.
Published in 2019, the book offers an updated take on where the market is currently and which binary options trading strategies are trending. It starts with the basics, then goes beyond that to offer practical strategies for traders.
All in all, it breaks down what can sometimes be a complicated subject in a way that the average trader can grasp.
Best for Pro Options Traders: The Option Trader's Hedge Fund
This book offers a slightly different take on options trading, with a focus on how to build your own options trading business. Written by a hedge fund manager and an option trading coach, it's designed to offer readers instruction on how to generate a consistent income by selling options using a strategic business model.
The end goal is to establish your own "hedge fund" with options at the center. It's written with both newcomers and established traders in mind and offers an interesting take on how to manage risk in your portfolio when introducing options.