Buying and Selling Volatility [Hardcover]

Kevin B. Connolly (Author)

Book Description

ISBN-10: 0471968846 | ISBN-13: 978-0471968849 | Publication Date: June 5, 1997 | Edition: 1

The concept of profiting from trading volatility is not new, but is known to only a few players in the derivatives industry. Buying and Selling Volatility is the first book to explain this trading strategy in detail without using complex mathematics. Offering a new approach to the subject of options, seen purely from a volatility viewpoint, the author uses illustrations to clearly explain the connection between volatility and options. He explains how investors can profit from the volatility, or lack of volatility, of an option price regardless of whether the market rises or falls. Useful to both novice investors and professional traders, Buying and Selling Volatility also supplies the reader with a risk management software system that is comparable to those used commercially.

Editorial Reviews

From the Publisher

Buying and Selling Volatility explains, with the extensive use of diagrams, how one can profit from the volatility (or lack of it) of the price of an instrument, irrespective of the direction of the price. It provides a unique approach to the subject of options, seen purely from a volatility viewpoint. Clearly explains the connection between volatility and options without recourse to complex maths. An accessible guide for students, it also offers experts a fresh look at instruments they have been trading for years. Contains risk management software (Microsoft excel) on disk similar to the high price commercial versions.

From the Back Cover

The concept of profiting from trading volatility is not new, but is known to only a few players in the derivatives industry. Buying and Selling Volatility is the first book to explain this trading strategy in detail without using complex mathematics. Offering a new approach to the subject of options, seen purely from a volatility viewpoint, the author uses illustrations to clearly explain the connection between volatility and options. He explains how investors can profit from the volatility, or lack of volatility, of an option price regardless of whether the market rises or falls. Useful to both novice investors and professional traders, Buying and Selling Volatility also supplies the reader with a risk management software system that is comparable to those used commercially.

See all Editorial Reviews

Product Details

• Hardcover: 230 pages
• Publisher: Wiley; 1 edition (June 5, 1997)
• Language: English
• ISBN-10: 0471968846
• ISBN-13: 978-0471968849
• Product Dimensions: 9.3 x 6.2 x 0.8 inches
• Shipping Weight: 1 pounds (View shipping rates and policies)
• Average Customer Review: 3.3 out of 5 stars  See all reviews (6 customer reviews)
• Amazon Best Sellers Rank: #1,746,468 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

11 of 14 people found the following review helpful:

3.0 out of 5 stars Update needed but okay for beginners, September 7, 2005

By 

Bachelier ""1004"" (Ile de France) - See all my reviews

This review is from: Buying and Selling Volatility (Hardcover)

Kevin B. Connoly's "Buying and Selling Volatility" is a useful work for beginning option traders and market makers, especially those coming from other fields. However, one should be strongly cautious on two fronts: 1) the book is now outdated by some years, both in strategies and more sophisticated technological advances (faster and better random number generators, automatic execution, VBA & C++ code, utilities, Excel advances, distributed networks, etc.); and 2) this book only addresses some simple strategies, and senior desks and hedge funds will be light years beyond those described here.

Both of these caveats are as one should expect from a book. Think about it, if Connolly had the holy grail of volatility trading, he would not write a book about it, he would be trading options.

This book, followed by Baird's superior work "Option Market Making" should give beginning junior traders and trainees a good foundation in basics, vocabulary, model techniques, etc. However, one should not look at this book as the only answer or a prime reference or authoritative. The chief advantage of BaSV is that it isolates option trading and techniques as a topic. In most other finance books, or even option pricing books, strategy and market making are left to the reader to figure out for themselves. Connolly joins Baird in writing from the perspective of a trader, not an academic. For this perspective alone it may be useful. However, for those with limited budgets, I suggest buying only Baird, and skipping this work.

15 of 20 people found the following review helpful:

2.0 out of 5 stars Good for beginners.., November 11, 1998

By A Customer

This review is from: Buying and Selling Volatility (Hardcover)

I found this book to be a good beginner book in trading . The chapters didn't go into much depth for more advanced traders . I would say that if your imtimidated by math then this book will be a good buy , but if you want depth and a bang for your buck ..you could do better.

1 of 1 people found the following review helpful:

5.0 out of 5 stars Great Introduction to Volatility, May 1, 2006

By 

M. Spink "Mallie99" (Brooklyn, NY United States) - See all my reviews
(REAL NAME)   

This review is from: Buying and Selling Volatility (Hardcover)

To get the most out of this book one needs to understand its original objectives. Many reviews seem to be critical of its elementary nature and concentrate on disputing its usefulness to those involved in advanced quantitative finance. I was initially skeptical of this book but a colleague insisted I look at it.

Connolly's analysis of option volatility and the `Greeks' is brief but precise and always to the point. (Why take five pages when you can do it in one?) The book is written without the use of complex equations so as not to intimidate the reader and appeal to a wider audience of new entrants to the field (both academic and practical). It is not intended to be the definitive options strategy guide guaranteeing instant profits. It does however give the reader a solid grounding in options fundamentals and leaves the reader confident in their ability to tackle texts of a more advanced nature.

Those comparing the lack of detail in this book to more advanced works have completely missed the point of this text. Even today, no other book (including Baird) equals this text in terms of introducing and explaining the mechanics of options.