The Four Biggest Mistakes in Option Trading, 2nd Edition (Trade Secrets) [Paperback]

Jay Kaeppel (Author)

Book Description

Series: Trade Secrets | Publication Date: November 17, 2006

With over 50,000 copies in print for the first edition, Kaeppel s insight has undoubtedly made its mark in the options world. Now, he strikes again with an updated and more comprehensive look at those pesky mistakes that traders continue to make in trading options. In easy-to-understand terms, he systematically breaks down each problem and offers concrete and practical solutions to overcome it in the future. There are big profits to be made in options trading. By avoiding the four most common and most costly mistakes the majority of traders make, you ll be set to win big. System and software developer Jay Kaeppel helps you thoroughly understand each mistake before showing you how to avoid them in future trades. In this new, color edition, you ll find: More in-depth analysis of the four biggest mistakes including volatility calculations, risk/reward relationships, calendar spreads, etc. More real world examples with varying scenarios updated to reflect today s market More graphs and tables to better illustrate Kaeppel s concepts More detailed discussion on the nature of options trading and how to create a consistently winning strategy Concise and to-the-point, here s an action plan you can read and put into place immediately to become a more profitable trader.

Product Details

• Paperback: 108 pages
• Publisher: Marketplace Books; 2 edition (November 17, 2006)
• Language: English
• ISBN-10: 1592802559
• ISBN-13: 978-1592802555
• Product Dimensions: 8.4 x 5.4 x 0.3 inches
• Shipping Weight: 1.6 ounces (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (5 customer reviews)
• Amazon Best Sellers Rank: #560,251 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

16 of 16 people found the following review helpful:

5.0 out of 5 stars Finally! A practical guide to options speculation, January 5, 2008

By 

Winston Kotzan (Chicago) - See all my reviews

This review is from: The Four Biggest Mistakes in Option Trading, 2nd Edition (Trade Secrets) (Paperback)

This small, quick read drastically changed the way I view options trading. Most of my knowledge about options has been obtained from an academic background - courses about hedging and quantitative arbitrage. I always knew that options could be a powerful tool for directional speculation, but my attempts to master it were always defeated by culprits such as time decay.

It was refreshing to see that this author recognizes that the academic view of options is flawed thanks to commissions and liquidity. He writes from the perspective of a speculator. After reading this short guide, I learned that as a speculator I was committing these Four Big Mistakes of option trading.

The Four Biggest Mistakes recognizes that the real market behaves much differently than the theories presented in academic class. It covers four distortions in the real market not typically taught by academia:

1. Option volatility fluctuates, causing the option price to act totally out of relation with the underlying stock price
2. Lower Deltas also mean that the option is less likely to be in-the-money at expiration
3. Complex quant strategies are not fullproof; each complex strategy has a downfall
4. Quant arbitrage strategies typically do not work because of a finite bid/ask price (less-than-perfect liquidity)

These real-market distortions cause people to misunderstand how options work in reality and consistently suffer losses. To understand these mistakes, the book is concisely written in a format presenting 1) the mistake 2) why it causes losses, and 3) how to avoid the mistake.

This is the most practical guide to options trading I have ever read. It is explained in clear language, short, and will help you become a better speculator. I recommend it if you want a realistic view of the options market.

11 of 12 people found the following review helpful:

5.0 out of 5 stars Good Book For Beginners, May 15, 2007

By 

Zachary Perryman (Redwood City, CA USA) - See all my reviews
(REAL NAME)   

This review is from: The Four Biggest Mistakes in Option Trading, 2nd Edition (Trade Secrets) (Paperback)

Experienced traders should already know what's in this book, but those new to options trading would probably benefit from reading this book early in their careers. The first chapter, on implied volatility, is very good and Kaeppel, unlike a lot of other authors, gives you an objective method for making judgments about relative implied volatilities, which can help you shape your trading decision. Prose is easily digestible and Kaeppel slams home his points. A quick read.

4 of 5 people found the following review helpful:

5.0 out of 5 stars A Must For "ALL" Traders, November 21, 2007

By 

Kirk Rains "Opie" (Renton, WA) - See all my reviews
(REAL NAME)   

Amazon Verified Purchase

This review is from: The Four Biggest Mistakes in Option Trading, 2nd Edition (Trade Secrets) (Paperback)

I had heard about this book, but did not read it until recently. A "MUST" for all new traders. It covers mistakes made by all - stocks, options, index, futures, currency, etc. Well worth the "investment."