Fundamentals of Options Market [Paperback]

Michael Williams (Author), Amy Hoffman (Author)

Book Description

ISBN-10: 0071363181 | ISBN-13: 978-0071363181 | Publication Date: December 19, 2000 | Edition: 1

Options are an investment vehicle that can enhance virtually any investment philosophy. Fundamentals of the Options Market provides a clear, concise picture of this global marketplace. Using examples drawn from contemporary financial news, this completely accessible guidebook describes why and how these versatile tools can be used to hedge risk and enhance return, while explaining popular products including listed stock options, index options, and LEAPS.

Editorial Reviews

From the Back Cover

Find Out How Any Investor Can Use Options to Lock in Fast Trading Profits­­and Decrease Portfolio Risk

Options are today's most complex, versatile investment tool. Ignored by investors who see them as an aggressive, no-limits trading gambit­­which they definitely can be­­options can, in addition, provide conservative investors with risk-hedging qualities available nowhere else. One thing is certain: all investors who trade options, regardless of their goals and strategies, quickly learn that the leverage provided by options opens the door to a world of innovative, profitable trading possibilities.

Fundamentals of the Options Market is a step-by-step guidebook for gaining increased trading profits­­while protecting against market downturns­­by using listed stock options, index options, and LEAPS. Plain-English analyses and explanations combine with quizzes, checklists, charts, graphs, and more to reveal:

• How to open an options account, map out your strategy, and place your first trade
• Trading tools­­from synthetics to Greeks­­for protecting positions and exploiting any market
• Tips of the Trade­­ How to remain focused, keep control of risks, and manage your options position

From hands-on basics to advanced technical skills, Fundamentals of the Stock Market will provide everything you need to profit from options in today's volatile markets. Let this hands-on book­­along with its companion Fundamentals of investing guides­­help you build the skills and confidence for options trading success ... before you risk money in the no-room-for-error waters of real-time trading!

Hone Your Trading Skills with McGraw-Hill's Fundamentals of investing series!

• Fundamentals of the Stock Market by O'Neill Wyss
• Fundamentals of the Futures Market by Donna Kline
• Fundamentals of the Bond Market by Esmé Faerber

About the Author

Michael S. Williams is president and CEO of Market Compass, LLC, which specializes in financial education for investors and traders online, via the Internet, and through the PCX Institute. Williams has been an options market maker on the Pacific Exchange (PCX) for nearly a decade. He is a frequent speaker at conferences around the country including the TSAA annual conference, the Options Industry Council seminars, and The Money Show.

Amy S. Hoffman is a founder and vice-president of Market Compass, LLC. She has been an options market maker on the Pacific Exchange (PCX) trading for hedge funds and as an independent market maker. Hoffman's financial career began in 1989 as a compliance officer and in-house trader for a large commodities firm. She is currently an instructor for the PCX Institute and Options Industry Council.

Product Details

• Paperback: 340 pages
• Publisher: McGraw-Hill; 1 edition (December 19, 2000)
• Language: English
• ISBN-10: 0071363181
• ISBN-13: 978-0071363181
• Product Dimensions: 10.9 x 8.5 x 1 inches
• Shipping Weight: 2.3 pounds
• Average Customer Review: 4.5 out of 5 stars  See all reviews (13 customer reviews)
• Amazon Best Sellers Rank: #390,720 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

12 of 12 people found the following review helpful:

4.0 out of 5 stars An options workbook that is useful!, January 4, 2001

By 

Jon Cohen (Naples, Florida) - See all my reviews

This review is from: Fundamentals of Options Market (Paperback)

I have been trading stocks and options for 3 years and found the volatility, strategy and synthetics section excellent. I have had a hard time understanding synthetics and the idea of creating other positions and understanding the risk and rewards was very useful. I already knew all the strategies but the book went into explaining how to trade them and hedge them. The contract vs. delta neutral was very informative and practical. The simple use of calculating volatility down to the day was very useful and helps me determine option's premiums against fair value. I like the workbook feel instead of textbook feel.

Pros - Simple explanation of volatility, intro to synthetics, strategy section with how to trade the positions, great basic strategy formula section, interesting market making section, seemed more like a workbook, and a the quiz at the end of each section.

Cons - More on Synthetics, some sections a little complicated for the beginner (This book is more intermediate then basic). Would like more on pricing formulas. The position trading section needs more examples instead of just one.

Final thoughts: ... it was worth it, not too complicated, and information that you can use. At least it wasn't another one of those "get rich" day-trading books about scapling 1/8s with nothing but speculation and a lot of BS. I have enough of those books on my self, wish I could sell them. McMillan's book is the only other option book that I have found useful.

24 of 28 people found the following review helpful:

2.0 out of 5 stars Too many errors to be used as a definitive resource, October 4, 2001

By 

KEVIN L. (CHICAGO, ILLINOIS United States) - See all my reviews

This review is from: Fundamentals of Options Market (Paperback)

As an instructor in equity options for a major market making firm, I've been looking for an introductory text to supplement the lecture material presented in our training classes. While MacMillan and Natenberg have written great books on the topic, the former is not specific enough to our market making business and the latter is too advanced for the beginner. In looking for something in between these two fine works, someone suggested to me the Williams/Hoffman book. It has been unsatisfactory in several respects. Explanations of some concepts appear out of context with the material being covered, some others are very muddled, and some are just plain wrong. The book also suffers from a trait common to many traders-turned-authors in that while the authors may be very knowledgable about their subject they aren't very good at conveying - at least in book form - that knowledge to others. While students with previous exposure to options concepts may be able to overcome these deficiencies, I wouldn't recommend this book to the beginner. The beginner would be much better served by picking up MacMillan's timeless classic.

12 of 13 people found the following review helpful:

4.0 out of 5 stars Good but many, many errors. Were the editors asleep?, April 4, 2002

By 

Carley Phillips (Austin TX) - See all my reviews

This review is from: Fundamentals of Options Market (Paperback)

The authors appear to know their subject well. I would recommend this as a beginner-to-intermediate introduction to fundamentals except for the numerous errors.

Some errors are like "typos" such as 6 instead of 60, some are more serious and subtle such as specifying a call when a put was meant, and some are fundamental structural problems with the book. For example, the Quiz answers don't match the chapters to which they purportedly provide answers, and in some cases only some questions are answered anyway.

The errors are so numerous, and some of a type that they won't be caught by the average beginner, that it might be dangerous for a beginner to rely on this book as a reference or as an only introduction to options.

I'd really like to have a completely "cleaned up" copy, as I think that could make this the best introduction that I'm aware of.