Option Theory and Trading: A Step-by-Step Guide To Control Risk and Generate Profits (Wiley Trading) [Hardcover]

Ron Ianieri (Author)

Book Description

Publication Date: July 7, 2009 | Series: Wiley Trading (Book 424)

Praise for Options Theory and Trading

"I've had the pleasure of teaching with Ron Ianieri at numerous live seminars for traders and investors, and one thing is for sure-Ron knows options! Now Ron has created a thorough, easy-to-read guide that you can benefit from in many ways, whether you are experienced in options trading or just starting out. I believe you will find Options Theory and Trading like Ron himself . . . full of knowledge, entertaining, fast-paced, and a joy to be around."
—Price Headley, CFA, CMT, founder of BigTrends.com

"I've had the pleasure of knowing and working with Ron for many years now. When managing funds in our asset management company, Ron has always been our 'go-to guy' on anything options-related. I've also taught a number of seminars side by side with Ron over the years where I've always come home knowing more about options than when I left! The man is truly the 'pitbull' of derivatives."
—Peter Reznicek, Chief Equity Strategist, www.ShadowTrader.net

"What a pleasure to read Ron Ianieri's new book, Options Theory and Trading. As a market technician for the last thirty-three years I am always looking for technical moves in stocks, and I rely on Ron's expertise for the optimum options strategy needed for each specific move I perceive happening in the markets. Ron's 'in the pits' experience serves to correct the misinformation in much of the published material and classes currently available to the unsuspecting options trader."
—David Steelsmith Elliott, Wallstreetteachers.com, World's #1 Market Timer, USIC

"Ron's expertise in options is as high as there is and his experience is unparalleled. Ron not only knows the answer but can explain it in a '101' fashion that is simple enough for even a novice to understand. His book is written in the same fashion. Ron not only explains the 'how to's' but also the 'how and why' which other books just don't seem to do. As a day trader/swing trader by nature, I also appreciate Ron incorporating real chart examples for us directional traders. For these reasons, I would highly recommend Ron's book to anyone interested in using options."
—Chris Rowe, The Trend Rider, www.tycoonresearch.com

Editorial Reviews

From the Inside Flap

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.

About the Author

Ron Ianieri is the cofounder and past chief options strategist for Options University, and the founder and Chief Options Strategist of ION Options, his new firm that provides courses, services, and training to aspiring options traders. Ianieri's Option Theory and Trading Course is considered one of the best options training tools in the industry. He has appeared on CNBC, CNN, and Fox Business News. Ianieri graduated from St. Joseph's University in Philadelphia with a degree in finance.

Product Details

• Hardcover: 352 pages
• Publisher: Wiley; 1 edition (July 7, 2009)
• Language: English
• ISBN-10: 0470455780
• ISBN-13: 978-0470455784
• Product Dimensions: 9.1 x 6.4 x 1.2 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (13 customer reviews)
• Amazon Best Sellers Rank: #425,844 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

32 of 39 people found the following review helpful:

5.0 out of 5 stars Best Basic Book on Options, August 16, 2009

By 

Mary Ellen Pagliara - See all my reviews
(REAL NAME)   

This review is from: Option Theory and Trading: A Step-by-Step Guide To Control Risk and Generate Profits (Wiley Trading) (Hardcover)

I have just finished reading Ron Ianieri's book "Options Theory and Trading" and it is by far the best basic option book I have read. Ron has the ability to explain a complex subject in such a very clear and concise way that it is a pleasure to read and is the perfect book for anyone wanting to trade options. This is the first of a series of three option books that Ron is writing.

Having struggled with McMillan and Natenberg I only wish that I had this book when I first started trading options. It would have made life much easier. This is a must read for learning option trading.

19 of 23 people found the following review helpful:

5.0 out of 5 stars Best Options Textbook, January 2, 2010

By 

Mary (Rapid City, SD) - See all my reviews

Amazon Verified Purchase

This review is from: Option Theory and Trading: A Step-by-Step Guide To Control Risk and Generate Profits (Wiley Trading) (Hardcover)

I purchased this book after buying Options GPS, a 20 CD course from [...]featuring Ron Ianeri covering the same material. I learn better from books than lectures. I could have saved $2,400 by just buying the book.
Master this material and you will know more than some personnel in etrade service departments!
Learn how to make money in bull, bear or stagnant markets while limiting your risk. Ron Ianeri is clearly one of the best options teachers anywhere. If you can afford only one book on options, get this one.
Tightly structured as befits a textbook. Clearly and logically organized. Can be read and understood by a motivated high school student.

10 of 13 people found the following review helpful:

5.0 out of 5 stars Options Theory Exposed!, February 7, 2010

By 

Ramal Murali (Boston, MA USA) - See all my reviews
(REAL NAME)   

This review is from: Option Theory and Trading: A Step-by-Step Guide To Control Risk and Generate Profits (Wiley Trading) (Hardcover)

Ron Ianieri is a tease. He bares the option pricing models one variable at a time accompanied by simple, seductive explanations. Your heart begins pounding with anticipation - what will come next! Chapter 3 (Option Theory) is a masterpiece (or is it a mastertease?) in explaining option pricing model without resorting to the mathematical equations. Being a reader who relishes the mathematical treatment as in Jeff Augen's `The Volatility Edge in Options Trading' (an elegant, effective, analytical presentation of Option trading strategies without eschewing mathematical rigor), I can't believe that I thoroughly enjoyed Ianieri's treatment without equations. It is not surprising that Ianieri is a master teacher, since he is the father of his `Option Theory and Trading Course'. The Option Theory discussion starts with an easily understood pictorial explanation of the normal distribution (Bell Curve), introduces the binomial model and finally the VSK (volatility, skew and kurtosis) model to account for the log normal distribution of returns.

The Greeks (delta, gamma, theta, and vega, which express the sensitivity of the options price with respect to the price of the underlying, time to expiration, and volatility) are covered extensively in chapter 4. Ianieri's treatment of the Greeks is excellent, especially the discussion of the `Volatility Smile' and `Volatility Tilt'. Ianieri even covers the second tier Greeks (V-Delta, T-Delta, V-Gamma, T-Gamma, V-Theta) although he has chosen, justifiably, to ignore the interest rate related first-tier Greek Rho.

Ianieri's penchant for avoiding mathematical equations makes for longer discussions; sometimes a simple equation is worth a hundred words! For example, the listing of the several synthetic positions could have been easily presented in fewer words by including a simple equation for put-call parity. The figures 5.1 -5.6 showing the synthetic position equivalence using P&L diagrams would be more useful if they had some scales and labels (similar to those in Chapter 6); this would have prevented the inclusion of the erroneous Figure 5.6 (synthetic short-put).

In Part II (chapters 6-11) Ianieri introduces basic option trading strategies (Covered Call, Covered Put, Protective Put, Synthetic Put and the Collar). Each strategy is clearly explained, with examples of real ticker symbols. Each strategy discussion ends with a synopsis, worth its weight in gold. I recommend that even if you skim through the chapters pay close attention to the synopsis, which elucidates the salient points of each strategy under discussion.

The author states, `as good as the options are in conjunction with stocks, they can be even better when traded against each other' - and then goes on to prove his point with a discussion of the advanced strategies `Spreads, Straddles and Strangles'. Again each strategy is clearly explained, with examples and concluding with a solid gold synopsis. The final chapters include discussion of the combination strategies (Butterfly and Condor).

Ultimately, a trader wins if he is right (whether he bets on higher/lower prices or higher/lower volatility) and loses if he is wrong. The only thing he can do is improve the odds of being right and hold the losses to manageable levels when he is wrong. Ianieri shows the beginning/intermediate reader how it can be done.

This book definitely belongs on your learning/reference shelf if you are serious about understanding about option trading and profiting from it.

The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets