Option Trading Books

Welcome to my library! These are some option trading books that I've read and found particularly useful in my education journey. As in many things, your mileage may vary. In addition, there are perhaps many other books out there to be read and certainly there are ones that I have read and found to be good. These are ones that I liked enough that I felt they had to be part of my library. Not all these books are on options trading specifically, but offer a nice foundation.

Stock Market and Stock Market Strategies


A Beginner's Guide to Short Term Trading - Toni Turner
This is a 'beginner friendly' book that talks about a lot of concepts like what makes prices rise and fall on a stock, the general market psychology behind why technical analysis works and so forth. This is a very inexpensive book that offers a lot of info on the stock market, although nothing really for the options trader.

Options and Options Strategies


Fundamentals of the Options Market - Michael S. Williams & Amy Hoffman
I found this to be a really good beginning book, especially on the topics of option pricing and understanding volatility. While I didn't necessarily care for or agree with some of the strategies discusses, I particularly liked their discussion of synthetics as well as their discussion of the market maker perspective as these two both were former options market makers.
Option Volatility & Pricing - Sheldon Natenberg
This is an even better book and really a 'must own' if you are serious about options trading. It offers a lot of similar material on volatility and pricing but is much more technical. In addition it offers some great ideas on strategies for taking advantages of the characteristics of options. While this is a tougher read than many of the books I've listed, I recommend putting the effort into reading AND understanding what Mr. Natenberg discusses. This is one of my favorite option trading books.
Options as a Strategic Investment - Lawrance G. McMillan
This book is another "must own". In fact of all the option trading books, this one contains the broadest coverage of options. On top of that, he also includes discussion of index options and futures. This is not a book you read cover to cover but it is an awesome reference on just about anything related to options and options trading.
The Bible of Options Strategies - Guy Cohen
Guy Cohen is the creator of the "Options Made Easy" education and software, as well as publisher of a book by the same name. This book is a nice reference of quite a number of options strategies. It covers the basic elements of the strategy as well as the impact changes in the various greeks have on the trade. As option trading books go, the only thing missing is more coverage on how to plan exits and manage trades.

Technical Analysis


Japanese Candlestick Charting Techniques by Steve Nison
Steve is really credited for popularizing this analysis style in the western world. On top of that, I really like this book because it not only showed the patterns but explained the psychology behind them. Definitely a must read if you intend to use candlestick chart pattern
Technical Analysis of the Financial Markets by John J. Murphy
John Murphy's book covers a vast number of different technical analysis approaches. In the book, coverage is given to candlestick chart patterns. The chapter is authored by Gregory Morris who also writes a book of his own called "Candlestick Charting Explained". I haven't read his book but the chapter he wrote in Murphy's book is quite good.

Trading Psychology and Money Management


Trading for a Living - Alexander Elder
This is an excellent overall book on the psychology of trading. There is a lot to rave about in this book, however the standouts to me are the first couple of sections on recognizing our tendency to be reckless and gamble. Another section that I found really good was the last chapter on risk management. This isn't covered a great deal so it's nice to see some guidelines. Dr Elder is fairly critical of options trading however so that shows up in a few places. While it may seem ironic to be included in a list of option trading books, there are enough gems in my opinion to make it worth owning.
Come Into My Trading Room: A Complete Guide to Trading - Alexander Elder
Another excellent book by Dr Elder. This one has some very similar elements to his first book but he has expanded on the psychology section and brings more application to the technical analysis section. There are plenty of books of the TA kind so I didn't really find that part as helpful anyway. Learning to use technical analysis is a much more valuable than just knowing the mechanics. I like both of his books but if you had to pick one, this book would probably be the book to get. My comments about Elder's opinions of options trading generally apply here as well.
Market Wizards: Interviews with Top Traders
The New Market Wizards: Conversations with America's Top Traders - Jack Schwager
These are just a couple in the 'Market Wizards' series. The basic formula is that Jack conducts an interview with 20 or so successful traders of all types and captures the lessons they've learned. I like these because you soon find it isn't any particular special strategy they employ. Every story is unique except when it comes to topics like risk management. Many learned these lessons the hard way - by losing a large sum of money.
Reminiscences of a Stock Operator - Edwin Lefevre
This is written as a fictional story but is generally considered to be a biography of Jessie Livermore. Jessie began trading in a different world than we trade in but there are some really good lessons to be gained from his experiences. Heck, he may have been in one of the "Market Wizards" books if he was around today. In the course of his highs and lows, he has a lot of wisdom to share.

Trading, Taxes and Business Entities


The Tax Guide for Traders - Robert A Green
No library of option trading books is complete without a a book on taxation issues. In that regard, this is a good book on the general tax issues related to trading, including options and futures. The author goes into different entities that can be established for trading and how they can potentially lower taxes. In addition he has a nice section on mark-to-market accounting and Section 1256 contracts. Overall, this was a nice guide to a fairly complex topic. I still chose to work with a company to set up my accounting, but at least I knew what the issues were.
Form Your Own Limited Liability Company - Anthony Mancuso
This book and its companion listed below are great guides to forming and maintaining a limited liability company. I wish I had purchased and read this book instead of paying someone to do the formation. It would have been a lot cheaper. This book takes you step by step through the process of forming and filing, including the part that was most intimidating to me - the operating agreement.
Your Limited Liability Company - Anthony Mancuso
Where the previously mentioned book was about the formation of an LLC, this book is about the operation. This is such a critical part of the whole thing to ensure that the IRS regards the company as legitimate and not just a way to evade taxes. Tips in this book include how to conduct annual meetings, file entity changes, etc.



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