Options trading is one of the most exciting and rewarding areas in contemporary finance. While options started as a highly technical and specialized derivative used mainly for placing small hedges on major equity positions, they have blossomed into extremely popular trading tools used for the creation of highly complex and sophisticated positions in every market, from equities and bonds to commodities and currencies.
Although the basics of options are simple enough, there is a lot of complex mathematics and financial theory that go into their pricing and use. There is so much useful information about options trading and options pricing that professional options traders all use one or more reference books about options trading to stay on top of everything they need to know to trade effectively.
Whether you are a seasoned pro or green beginner, it is essential to have a few solid books on hand when dealing with the complexity of the contemporary options market.
Here are the top 3 options trading books as ranked by the pros who use them to successfully trade options every day.
Get Rich with Options by Lee Lowell
The author of this book has real trading experience as an options market maker on the trading floor and then as the founder of his own trading firm, and this hands-on experience shines through the entire book.
Get Rich with Options is a simple approach to options trading that offers 5 effective strategies for options trading. The author makes the effort to explain concepts in every day terms and never makes anything more complicated than it needs to be.
This is considered the top options trading book for beginners and for options traders who like to keep things simple. Don’t be thrown off by the title like I was, it is actually packed full of important information and strategies that work.
Options Made Easy by Guy Cohen
This book offers all the bread and butter knowledge that you need to trade options presented in an accessible and enjoyable format. Starting out from the very basics, the author takes you through the basics behind “the Greeks” (the Greek letters used as symbols for essential options measurements), all the fundamental options trading techniques and then closes with an insightful chapter on the psychology of trading. Every concept and idea is backed up with useful diagrams and easy to understand examples from the real world of options trading.
This book works for any options traders, from humble beginners right to seasoned pros, and is considered an essential part of any true options trader’s library.
Options as a Strategic Investment by Lawrence G. McMillan
This book is considered the options trading manual for professional options traders. Inside you will find everything that there is to know about options trading covered in full detail and backed up by extensive examples.
Weighing in at around 1000 pages, most options traders do not read the book from cover to cover, but rather use this book as a handy reference guide when developing a position or feeling out a potential trade.
This book is considered to be the essential options trading manual for professional traders, combining all there is to know about options in one simple and easy to follow guide.