Basic Black-Scholes: Option Pricing and Trading by Timothy Falcon Crack

This week's featured book on options trading:

Basic Black-Scholes: Option Pricing and Trading
by Timothy Falcon Crack
Timothy Crack (April 2009)

From the publisher: This is the revised second edition of Basic Black-Scholes. This book gives extremely clear explanations of Black-Scholes option pricing theory, and discusses direct applications of the theory to option trading. The presentation does not go far beyond basic Black-Scholes for three reasons: First, a novice need not go far beyond Black-Scholes to make money in the options markets; Second, all high-level option pricing theory is simply an extension of Black-Scholes; and Third, there already exist many books that look far beyond Black-Scholes without first laying the firm foundation given here. The trading advice does not go far beyond elementary call and put positions because more complex trades are simply combinations of these. The appendix includes Black-Scholes option pricing code for the HP17B, HP19B, and HP12C.

This revised second edition is accompanied by two downloadable spreadsheets. The first allows the user to forecast transactions costs for option positions using simple models. The second allows the user to explore option sensitivities including the Greeks.

This edition also includes Bloomberg screens and expanded analysis of Black-Scholes interpretations.

Upside Trading Strategies: Using Options for High Profits with Low Risk by Andy Chambers

This week's featured DVD on options trading:

Upside Trading Strategies: Using Options for High Profits with Low Risk (DVD)
by Andy Chambers
Marketplace Books (January 2009)

From the publisher: Using a tried and true methodology, Andy Chambers will show you how the basic tenets of technical analysis can translate into big gains for you in futures options. During this 90-minute DVD, Andy will review his favorite trade setups, explain his easy to recognize method for defining swing highs and lows on any chart, and review the key action points that can be the catalyst for entering or exiting a trade including breakouts, wide-range reversals, gaps, hurdles, failed signals, and tails.

He will also cover his favorite stochastic divergence setups and share his unique seasonal charts that actually forecast the future price levels for each market. He will discuss the importance of strategizing, especially with options, and especially for traders with smaller accounts. To wrap it all up, Andy will illustrate the impact presidential election results usually have on interest rates and how to take advantage of those types of opportunities using futures options.

Option Theory and Trading by Ron Ianieri

This week's featured book on options trading:

Option Theory and Trading: A Step-by-Step Guide To Control Risk and Generate Profits
by Ron Ianieri
Wiley (July 2009)

From the publisher: When used correctly, options can greatly enhance your profits. The leverage they provide allows small accounts to trade like big ones, without the normally associated risks. And, in times of financial turmoil, options can keep you from incurring catastrophic losses. There are many ways in which options can both protect your portfolio and help you profit—but in order to take advantage of these opportunities, you have to learn how to properly use options in your investment endeavors.

As the cofounder and former chief options strategist for the Options University, and now as founder of ION Options, author Ron Ianieri is one of the most well-respected, and well-informed, individuals in this field. Over the course of his successful twenty-plus-year career in the options market, he has trained many professional traders, as well as numerous active investors. Now, with Options Theory and Trading, he shares his extensive experience with you.

Based on a proven option-trading course created by Ianieri, which follows a logical step-by-step progression, this book opens with an in-depth explanation of option terms and theory in Part One—because learning the language and understanding the theory is the foundation upon which successful option strategies are built. Continuing along these lines, Ianieri takes the time to explore the unique risks and rewards of call and put options, and introduces you to the option pricing model, the "Greeks," and synthetic positions.

In Part Two, Ianieri moves on to basic trading strategies involving stock and options, including the covered call/buy-write strategy, the covered put/sell-write strategy, the protective put strategy, the synthetic put/protective call strategy, and lastly, the collar strategy. In addition to this, you'll also discover the role of the "lean" in options trading and how to "roll" your position to establish a stream of income.

While Ianieri demonstrates how well options function in unison with a stock position—enhancing potential gains, providing profit protection, and limiting the risk of the entire investment—he also examines how they can be even more effective when traded against each other. In Part Three, you'll gain an in-depth understanding of how to use vertical, diagonal, and time spreads in this way, and discover how straddles and strangles—which both feature the use of options in unison with one other—can help you achieve strong premium collection.

Rounding out this detailed discussion of options is a close look at combination strategies. Part Four of Options Theory and Trading takes you through fully hedged strategies known as the Butterfly and the Condor, and offers practical advice on how and when to use them.

In an environment of increasing volatility, there's great risk of market corrections endangering the capital of individual investors around the world. What you need to achieve long-term success in today's market is the right guidance. With Options Theory and Trading, you'll quickly discover how to use options to increase your portfolio's profit potential and reduce the risks you'll inevitably face.

Also available: Option Theory and Trading f(Kindle edition). Learn more about the Amazon Kindle, a wireless reading device.

Option Strategies for Directionless Markets by Anthony J. Saliba

This week's featured book on options trading:

Option Strategies for Directionless Markets: Trading with Butterflies, Iron Butterflies, and Condors
by Anthony J. Saliba
Bloomberg Press (March 2008)

From the publisher: If you know the right strategies, you can profit by trading options in a sideways, or directionless, market. (This is fortunate because directionless markets occur more frequently than bull or bear markets.) This hands-on workbook teaches you the most important trading strategies and how to apply them.

You'll find out how to identify, enter, manage, and exit a trade. The special format makes it easy to learn; illustrations, exercises, what-if scenarios, and quizzes have you mastering the material in no time. The butterfly family of option strategies is covered, including: butterflies, iron butterflies, condors, broken-wing butterflies, pterodactyls, and iron pterodactyls. The greeks--delta, gamma, vega, and theta--are also covered. Understanding the greeks is essential to deciding how to apply the strategies.

If you are a professional or an active individual trader, you can benefit from this book.