Customer Reviews

Options Trading 101: From Theory to Application

5 star:		(9)
4 star:		(8)
3 star:		(0)
2 star:		(0)
1 star:		(2)

 

 

Length:: 1:34 Mins

This is a quick review of the excellent stock options trading book written by Bill Johnson called Options Trading 101. -john


I had a chance to buy Bills book when I met him in person at an options trading seminar before the book was launched publically.

Bill is one of the traders for a company called Options University which teaches stock options trading. Bill's book hit number one on Amazon just after it launched, so a lot of other people must have thought it looked pretty good too.

I guess the simplest thing I can say about Bill's book is that there is a fully in-depth options trading education within the 449 pages of the book, and if you have the discipline to go through the book slowly, taking notes, you can get an education that others have paid hundreds or maybe even thousands of dollars to recieve.

One of my favorite parts of Bill's book are the chapter review quizzes that he gives at the end of each chapter. Like any good teacher who teaches you something and then reviews with you to make sure you got it, Bill does just that with his end of chapter quizzes.

Bill goes from very beginner to rather advanced between the pages of this book and he does it in a pretty simply and easy to understand way, drawing a lot of connections to other real life matters to make understanding the more technical parts of trading a lot easier.

For a $20 book on options trading success, Bill's book is a no-brainer.

I'm one of those people that would rather read a book or magazine where I am learning something useful than some non-fiction thriller or social rag. And in this 400+ page book, let me tell you, I learned way more than I expected. Not only that, Bill's writing style enables you to really understand the concept so you won't forget them. This is because Bill Johnson really has a knack for making the most difficult concepts easy to understand. One example that only Bill could pull off is to equate high volatility to a kangaroo and low volatility to a frog. You'll have to read the book to see how it all ties together. After reading my fair share of options books, this book really stands out as a book that you can build a solid options trading foundation from. If you wanted to go read other books that covered the advanced topics in more detail (McMillan comes to mind) you would be much better off after reading this book.
So, I'm reading along, and I come across the occasional typos or editorial errors, no big deal, but in some cases the errors are serious. Some of the answers in the chapter-end quizzes are wrong; there are some math calculations that are wrong, and I gave it some thought. I realized this could be a good thing, that these editorial mishaps were asking me to make sure I was reading very carefully and making my own decisions. Of course there is enough information in each chapter to overcome any of the errors. But it felt good to know the material so well that I had the confidence and knowledge to know what the right answers should be.
A book like this, one that will be used for regular reference could also greatly benefit from an index.
For me this book was a turning point in my options trading development, so much so, that it inspired me to write my first Amazon review and give it the highest rating.

This book had so many errors and blatant contradictions it was more confusing than the genealogy of Jesus. It will have your head spinning so fast some may mistake you for Linda Blair! The author blitzes the reader with math and details the understanding of which simply is unnecessary in order to trade options and could easily intimidate someone new to trading. The excessive errors found throughout the text are inexcusable, especially for a technical book. When practical applications are finally covered in the final third of the book, we aren't presented with anything really interesting. The Iron Condor strategy is mentioned once earlier but is quickly dismissed in a condescending manner as if someone who could thread through all that math wouldn't easily pick up that relatively simple concept! If you are new to trading and don't want to be more confused after you read this book than before you picked it up, this one should be avoided.

I could not put this book down. The text is very accessible and makes for quick reading. It contains a mountain of information that will serve any option (or stock) trader quite well.

This isn't an "options playbook" or list of strategies, though it provides some. More importantly, this is a book that answers a lot of fundamental questions about how options are priced, why there isn't any free money (good coverage of arbitrage and the function of market makers,) volatility, synthetic options, leverage, the meaning and usage of some of the more common metrics and indicators available when looking at options chains, and then covering the mechanics of working with options and how rights/obligations are dealt with and how these processes translate to orders given to your broker.

With this information, you are well-armed to learn pretty much any specific strategy from a playbook, and will have the requisite know-how to pick up and understand all those other strategies with very little effort. The chapter key-points, quizzes and then answers are an excellent way to spot-check your comprehension.

Mostly it's done very well.. HOWEVER, the quizzes/answers were poorly proof-read by quality control. There are several instances of blatantly incorrect answers provided (because the answer wasn't for the question posed) or in one case, the answer section restated the question rather than answering it! There were a few instances where the options chain image didn't match the values being discussed in the text.

The mistakes in the Q&A self-review sometimes end up costing the reader extra time in re-reading the question, answer, and previous chapter's text/graphs. There is a seed of doubt in later readings where you wonder if you've encountered another editorial error, or if you have a genuine misunderstanding of the material. It's quite undesirable when you're new to the material. Thankfully in most cases, the correct answer is discernible quickly, but I feel these mistakes should have been caught before publication, and feel OptionsUniversity or MorganJames needs to put out an errata document for the first edition and consider releasing a second edition.

In spite of this, the actual number of errors isn't terrible. Because the book is highly accessible and easy to read, and a very enlightening primer that I would without hesitation recommend to a friend (of course telling them in advance there are a few minor errors with graphs not matching text or mistakes in later self-reviews.)

Really wanted to give this one 5 stars, but knocked it to 4 due to editing errors.

I bought "Options Trading 101" because I didn't know anything about the terms and concepts of options. Johnson has explained the terms and concepts in plain simple english. I was initially overwhelmed by the amount of information, so I set a target to read one chapter each day. At the end of each chapter there are review questions. The questions are multiple choice and quite easy - there are a couple of tricky ones but Johnson provides the answers. After I finished reading the book I felt comfortable with my understanding of the six components of the Black - Scholes Option Pricing Model and basic option strategies. This book isn't going to gather dust on the bookshelf, I intend to read it again in the near future.

Mr. Johnson's book is well suited for those with little or no knowledge about options. It's a good place to start before you are ready to move on to more complex strategies.

I got somewhat impatient with the basic and repetitive nature of the first third of this book, but pace and complexity really picked up as things went along. The description of synthetic options was eye-opening, and introduction to spreads near the end was very good. Recommended as beginner to intermediate text.

You know, stock options are not the easiest thing to understand. Bill Johnson has been teaching options for a number of years and has developed a very soothing approach that invariably places his audience at ease.

With his first book, Bill has carried this approach forward and has come up with a text that will quickly become a "must have" title for anyone who is at all serious about trading options. I have read many, many books on this subject and most of them get stuffed into boxes or given away. This one is a keeper, however!

As the "101" title implies, Bill picks up with the basics. You will learn what an option contract is and how it functions. He tackles the tough ground, addressing options pricing but does so in a manner that does not demand an advanced degree in mathematics from his readers.

Once you have the basics down, it is important to understand what risks and benefits you obtain by buying or selling particular option contracts. Bill Johnson has addressed precisely how to go about doing this using profit and loss diagrams. An exploration of how the options markets work, then follows.

This is where your introductory "101-type" experience ends. Bill seamlessly transitions from the basics into a discussion about synthetic positions and the interrelationship of call and put options. Volatility, its effects, and how to use it, are covered in a chapter dedicated to the subject. A discussion of how to apply options for trading purposes, including a dialog on basic option spreading techniques, begin pulling the prior material together. The concepts of leverage and position hedging are also addressed.

Obviously, Bill Johnson has gone beyond an introductory discussion of options and tackles some of the more difficult, and important, material that is simply necessary for options trading success. When you consider the small financial investment involved, they only question I would pose is why would you not want to pick up a copy of this book?

Christopher Smith
TheOptionClub.com

Bill Johnsons Options 101 trading book is an excellent introduction to the how's and why's of option trading. The style of this book is exactly like many college math and science textbooks with examples and problem sets. I personally have benefited from the discourse on the "roll-up," which is a strategy I had not come across previously in other training material.

The book suffers, however, from poor proof-reading of the arithmetic. There are many places where the numbers don't add-up to what the words are saying, and vice-versa. Some may find that scribbling the corrections in the margins improves comprehension but if your arithmetic skills are weak then this book may not be for you. I think Options Trading 101 deserves a 2nd edition to correct the errors.

Now, I read the book, and frankly I wasn't very impressed. Basically all of what the author said could be found online (yes, I know this is a "beginner's" book), but he still could've added something more. Also, is it just me, or does it seem like all of the other reviews here have been created by either the author himself, or his subordinates?