Last updated: 20 December 2021. I've found and ranked the best options trading books for 2022 below. You'll find shortlists of niche options trading book categories, together with my ultimate ranking of the best options trading books.
I picked my favourite books about options trading on the basis of external reviews, sales volume and my own personal take on each title. I have applied equal weighting to each of this factors, in an attempt to present a consensus view of which books about trading options are the most popular and the most critically acclaimed.
Options trading is not as accessible to beginners as stocks and shares or even property investment. Therefore, it follows that options trading books are written at a more experienced and financially literate audience than the average investing book.
That being said, you'll see below that I've found options trading books for beginners and featured these separately, so that newer investors can quickly find an options book which doesn't demand quite as much assumed knowledge.
With prices ranging from £5 - £25, stocking up on a few of the best options trading books can deliver the same value as an expensive seminar for only a fraction of the cost. They can even be read for free with Amazon's Kindle Unlimited free trial.
Click on any title below to see the latest price from Amazon, you'll be shocked at how affordable the most popular titles are. As an Amazon Associate, I earn a small commission from qualifying purchases which helps to support this site. This does not impact how I compile the list. Happy reading!
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My Top 5 Options Trading Books for 2022
Click covers to see latest reviews and prices1. Trading and Pricing Financial Derivatives - Patrick Boyle
Financial Expert Rating:
Synopsis:
"Trading and Pricing Financial Derivatives is an introduction to the world of futures, options, and swaps. Self-study investors who are interested in deepening their knowledge of derivatives of all kinds will find this book to be an invaluable resource.
The authors delve into the history of options pricing; simple strategies of options trading; binomial tree valuation; Black-Scholes option valuation; option sensitivities; risk management and interest rate swaps in this immensely informative yet easy to comprehend work.
Using their vast working experience in the financial markets at international investment banks and hedge funds since the late 1990s and teaching derivatives and investment courses at the Master's level, Patrick Boyle and Jesse McDougall put forth their knowledge and expertise in clearly explained concepts. This book does not presuppose advanced mathematical knowledge and is designed for a general audience, suitable for beginners through to those with intermediate knowledge."
Who this book is for:
A comprehensive guide for individual investors who want a clear and concise education on financial derivatives (including options) from an authority.
Patrick Boyle is a hedge fund manager who has practical experience in using options to execute trading strategies. He's also a professor of finance at King's College London.
This book shows off both Patrick's depth of understanding and communicating skills.
Now in its second edition; this book is an update to Patricks first original authored title.
Trading and Pricing Financial Derivatives is easy to recommend as your 'first book' about options. Despite the broad title - this book references options in most chapters.
Financial Expert Rating:
Synopsis:
"The bestselling Option Volatility & Pricing has made Sheldon Natenberg a widely-recognized authority in the option industry.
Now, in this revised, updated, and expanded second edition, this thirty-year trading professional presents the most comprehensive guide to advanced trading strategies and techniques now in print. Covering a wide range of topics as diverse and exciting as the market itself, this text enables both new and experienced traders to delve in detail into the many aspects of option markets,"
Who this book is for:
At firms around the world, the text is often the first book that new professional traders are given to learn the trading strategies and risk management techniques required for success in option markets.
Expect to find the following topics covered:
- The foundations of option theory
- Dynamic hedging
- Volatility and directional trading strategies
- Risk analysis
- Position management
- Stock index futures and options
- Volatility contracts
Clear, concise, and comprehensive, the second edition of Option Volatility & Pricing is sure to be an important addition to every option trader's library--as invaluable as Natenberg's acclaimed seminars at the world's largest derivatives exchanges and trading firms.
Financial Expert Rating:
Synopsis:
"Updated with new facts, charts, and strategies to help investors beat today’s tough markets, Trading Options For Dummies helps you choose the right options based on your investing needs. It will show you how to weigh the costs and benefits, build a strategy to gain no matter the market conditions, and broaden your retirement portfolio with index, equity, and ETF options.
Because options cost less than stocks, they’re a versatile trading instrument. If you’re an investor with some general knowledge of trading but want a better understanding of risk factors, new techniques, and an overall improved profit outcome, Trading Options For Dummies is the book for you.
- Protect your investments against a decline in market prices
- Increase your income on current or new investments
- Buy an equity at a lower price
Benefit from an equity price’s rise or fall without owning it or selling it outright
- Trading options can be a great way to manage your risk, and this detailed reference gives you the expert help you need to succeed."
Who this book is for:
The most widely read (and reviewed) options trading title on this list, I couldn't avoid featuring Trading Options for Dummies on my top 5 options trading books ranking.
You may not be aware, but each 'for Dummies' investing book is usually written by a different author - typically a specialist in their field. This Dummies book is no different.
Dr. Joe Duarte is an active trader and financial analyst. He's written numerous books which have attracting critical acclaim - although interestingly this format is perhaps his most successful book to date.
With a 4.4 / 5.0 rating on Amazon based on over 600 reviews, this options trading book is a clear contender for first place on this ranking.
Financial Expert Rating:
Synopsis:
"In the Second Edition of Trading Options Greeks, veteran options trader Dan Pasarelli puts these tools in perspective by offering fresh insights on option trading and valuation.
An essential guide for both professional and aspiring traders, this book explains the greeks in a straightforward and accessible style. It skillfully shows how they can be used to facilitate trading strategies that seek to profit from volatility, time decay, or changes in interest rates. Along the way, it makes use of new charts and examples, and discusses how the proper application of the greeks can lead to more accurate pricing and trading as well as alert you to a range of other opportunities.
- Completely updated with new material
- Information on spreads, put-call parity and synthetic options, trading volatility, and advanced option trading is also included
- Explores how to exploit the dynamics of option pricing to improve your trading"
Who this book is for:
If you're new to options trading, you might be wondering: 'What are option greeks?'. Are they a type of option, or an option traded in Europe?
The answer is no; Greeks are the name given the various component factors which drive option pricing.
Named after the Greek symbols used to represent them in option pricing formulae, having a comprehensive understanding of the greeks is essential to long-term options trading success.
Trading Options Greeks, Second Edition shows you how to use the greeks to find better trades, effectively manage them, and ultimately, become more profitable.
Financial Expert Rating:
Synopsis:
"Custom-tailored to respond to the volatile option trading environment, this expert guide stresses the importance of finding a valid edge in situations where risk is usually overwhelmed by uncertainty and unknowability. Using examples of edges such as the volatility premium, term-structure premia and earnings effects, the author shows how to find valid trading ideas and details the decision process for choosing an option structure that best exploits the advantage.
Advanced topics include a quantitative approach for directionally trading options, the robustness of the Black Scholes Merton model, trade sizing for option portfolios, robust risk management and more.
No matter the market conditions, Positional Option Trading is an important resource for any professional or advanced options trader."
Who this book is for:
Positional Option Trading is a rigorous, professional-level guide on sophisticated techniques from professional trader and quantitative analyst Euan Sinclair.
Targeted at finance professionals or private day traders, Euan's title is too complex for a beginner to options trading.
This book:
- Provides advanced trading techniques for experienced professional traders
- Addresses the need for in-depth, quantitative information that more general, intro-level options trading books do not provide
- Helps readers to master their craft and improve their performance
- Includes advanced risk management methods in option trading
The Financial Expert™ Best Option Trading Book Challenge
I challenge you to read one options trading book per month and see if it revolutionises your investing style!
The Financial Expert™ Best Option Trading Book Challenge is a popular feature on this website.
It's simple really, and its simplicity is perhaps the key factor which makes this book challenge a success where others may fail:
I challenge you to read one option trading book per month for the next year, and find your new favourite!
Does that feel like a tall order? Let's ponder that in more detail:
How long does a book take to read? Well, if we use Patrick Boyles 'Trading & Pricing Financial Derivatives' as an example, this popular title has 258 pages. At an estimated 60,000 words, this could be read in under 6 hours.
Therefore this challenge could take just over 1.5 hours of your time per week. Does that sound achievable?
Is it difficult to keep finding new option trading books? By book number 12, will the content be repetitive and uninteresting?
The answer to this is: it depends. It depends on how carefully you select the books you read, and the order you read them in.
For a 12 book options trading book sequence, I'd begin with two broad options books for beginners.
These will cover the essential groundwork of financial options and other derivatives, and will act as a signpost to each of the 'sub-topics' within.
At this point, I recommend that you let your curiosity take over. Here's a few ways to specialise:
Choose books with different types of options
Which types of options intrigued you the most? Which types of options would you be the most likely to trade?
If vanilla call options took your fancy, then why not pick up a couple of titles that hone in on call option trading? By picking a specialist title, you'll discover far more about a specific option than you would expect.
After all, you don't know what you don't know until an author makes a new point or points you in a different direction for the first time.
Stay general - research derivatives or trading approaches
You may want to remain a 'generalist' when it comes to the type of financial instrument, but you may want to explore different strategies, or ways to trade them.
If so, pick up a day trading book, derivatives book, or quantitative & technical analysis book, which can all provide a new perspective on options trading.
Obscure strategies such as quantamental trading are perhaps too niche for your first handful of books, but when you're at title #10 it might make perfect sense!
For your final book, I suggest looking at a good structured products book. Structured products use utilise options alongside other assets such as bonds to produce some interesting risk/reward payoff outcomes. They're intriguing and yet poorly understood, due to the veil that hides the inner workings of the product from retail investors.
Some guidance
- I found it helpful to stock up on books for the next few months, so that when a new month rolls around, my next book was my bed-side table asking to be opened!
- Pick a variety of styles. This will keep the challenge fresh and increase the diversity of opinion.
- Pick at least one book that you don't think you would enjoy, this book might be the one that surprises you the most!
- If you're time-starved, audio books are absolutely fine!
Where to begin?
My list of the 5 best options trading books above is as good as any place to start, as I have consciously included a mix of different writing and investing styles to ensure that it caters to a wide audience.
Good luck!
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