Options Trading for the Conservative Investor by Michael C. Thomsett

This week's featured book on options trading:

Options Trading for the Conservative Investor: Increasing Profits Without Increasing Your Risk
by Michael C. Thomsett
FT Press (March 2009)

From the publisher: If you're an investor concerned with preserving capital, maximizing predictability, and maintaining consistently strong returns, your best solution just might surprise you: options. In Options Trading for the Conservative Investor, Michael C. Thomsett reveals a narrow band of options strategies that can help you improve results as you systematically reduce unnecessary risk throughout your portfolio.

Thomsett writes in simple, nontechnical language, uses real examples, and guides you through every strategy–one easy step at a time. He's made this book simple and visual enough for any experienced investor to use, even if they have no experience trading options.

Thomsett systematically covers several options strategies optimized for conservative investors, including covered call writing on carefully selected stocks, contingent purchase strategies, and powerful "combination" strategies that produce cash to bolster current income. No matter how cautious an investor you are, this book will give you powerful new tools for achieving your financial goals–without losing a moment of sleep.

 • Fundamental ground rules for conservative options investors
 • What you should know and believe before you get started
 • How options fit into your conservative trading strategy
 • Deciding what stocks to buy or sell options on–and what to avoid
 • Examples and case studies based on an actual model portfolio
 • Practical guidance for leveraging each strategy with your own portfolio
 • Practical "rescue" strategies
 • Recovering your investments when market values have fallen
 • How to take profits without selling stock
 • Step-by-step techniques based on long puts and short calls

Also available: Options Trading for the Conservative Investor (Kindle edition). Learn more about the Amazon Kindle, a wireless reading device.

Trading Stock Options: Basic Option Trading Strategies by Brian Burns

This week's featured book on options trading:

Trading Stock Options: Basic Option Trading Strategies And How I've Used Them To Profit In Any Market
by Brian Burns
CreateSpace (April 2009)

From the publisher: In Trading Stock Options, experienced option trader Brian Burns, explains the basics of stock options and shows you how to trade the most successful option strategies. As you begin your journey on the option path, you'll have the luxury of real-life trade examples to show you the way. The diagrams and charts help turn the complex world of options into easy to visualize and simple to understand strategies that even the most novice of traders can utilize.

Trading Stock Options will show you how you can use options to:
 • Get paid to buy and sell your favorite stock
 • Purchase stocks for less than their current price
 • Buy insurance on stocks in your portfolio
 • Profit when stocks lose value
 • Perform short-term trades with less money than trading the stock.

Also available: Trading Stock Options (Kindle edition). Learn more about the Amazon Kindle, a wireless reading device.

Volatility Trading by Euan Sinclair

This week's featured book on options trading:

Volatility Trading (book and CD-ROM)
by Euan Sinclair
Wiley (June 2008)

From the publisher: In Volatility Trading, Sinclair offers you a quantitative model for measuring volatility in order to gain an edge in your everyday option trading endeavors. With an accessible, straightforward approach. He guides traders through the basics of option pricing, volatility measurement, hedging, money management, and trade evaluation. In addition, Sinclair explains the often-overlooked psychological aspects of trading, revealing both how behavioral psychology can create market conditions traders can take advantage of-and how it can lead them astray. Psychological biases, he asserts, are probably the drivers behind most sources of edge available to a volatility trader.

Your goal, Sinclair explains, must be clearly defined and easily expressed-if you cannot explain it in one sentence, you probably aren't completely clear about what it is. The same applies to your statistical edge. If you do not know exactly what your edge is, you shouldn't trade. He shows how, in addition to the numerical evaluation of a potential trade, you should be able to identify and evaluate the reason why implied volatility is priced where it is, that is, why an edge exists. This means it is also necessary to be on top of recent news stories, sector trends, and behavioral psychology. Finally, Sinclair underscores why trades need to be sized correctly, which means that each trade is evaluated according to its projected return and risk in the overall context of your goals.

As the author concludes, while we also need to pay attention to seemingly mundane things like having good execution software, a comfortable office, and getting enough sleep, it is knowledge that is the ultimate source of edge. So, all else being equal, the trader with the greater knowledge will be the more successful. This book will provide that knowledge.

Also available: Volatility Trading (Kindle edition). Learn more about the Amazon Kindle, a wireless reading device.

Trading Option Greeks: How Time, Volatility, and Other Pricing Factors Drive Profit by Dan Passarelli

This week's featured book on options trading:

Trading Option Greeks: How Time, Volatility, and Other Pricing Factors Drive Profit
by Dan Passarelli
Bloomberg Press (June 2008)

From the publisher: Veteran options trader Dan Pasarelli explains a methodology for option trading and valuation in this timely volume on option greeks. With an introduction to option basics as well as chapters on spreads, put-call parity and synthetic options, trading volatility, and advanced option trading, Trading Option Greeks holds new pertinent information on how the greeks can drive profit.

The greeks (delta, gamma, theta, vega, rho) are tools to measure changes in an option's value based on corresponding changes in:

• Volatility
• Time to expiration
• Underlying price
• Interest rates

Using these tools can lead to more accurate pricing and trading and alert the option trader to a range of opportunities.