Options: Trading Strategy and Risk Management (Wiley Finance) [Hardcover]

Simon Vine (Author)

Book Description

Series: Wiley Finance | Publication Date: February 11, 2005

The key concepts and essential strategies behind the successful use of options
Written by Simon Vine, a seasoned trader who has over ten years of experience on Wall Street under his belt, Options is the definitive book on options for traders, investors, and risk professionals. Options provides a step-by-step approach to trading, hedging, and investing using options, and shares the key concepts essential to successful options use. Options also explores how to use a wide variety of options strategies and shows readers how to select the strategy that best fits their own psychological risk profile. Filled with real-world examples and proven strategies, this invaluable resource will be of interest to all professionals-and newcomers-who'd like to exploit options for strategic advantage, risk management, or profit.
Simon Vine (Moscow, Russia) is deputy head of the investment banking division at Alfa Bank, the largest private financial institution in Russia. He holds an MBA from Columbia Business School and a BA from the Institute for Finance and Economics in Moscow.

Editorial Reviews

From the Inside Flap

By their very nature—as financial instruments with nonlinear payoff patterns—options require both a theoretical understanding of pricing and a razor-sharp intuition about risk and reward, in order to deploy them successfully. It doesn't matter whether you're looking to use options for strategic advantage, risk management, or profit—if you're uninformed, you're guaranteed to underperform.

Written by Simon Vine, a seasoned trader with over ten years of experience on Wall Street, Options: Trading Strategy and Risk Management will introduce you to the most interesting and diverse applications of options and other plain vanilla and exotic derivatives. This comprehensive resource offers a step-by-step approach to trading, hedging, and investing with options, and shares the key concepts and essential theories behind the successful use of options in today's markets. Options takes you from a basic clarification of terminology to straightforward explanations of complex options strategies. Along the way, you'll become familiar with a wide variety of topics that will enhance your options skills, including:

• Options Strategies—straddles, strangles, calendar (horizontal) spreads, diagonal spreads, butterfly spreads, and ratio spreads
• The Risk Parameters of Options—volatility and the "Greeks," the impact of interest rates on options pricing and strategies, and exotic options
• Market Support—the process of market-making on option markets
• Hedging with Options—dynamic hedging and other complex hedging strategies
• Credit Risk—of options strategies and deals
• The Psychology of Trading—self-control of psychological factors when investing and problems with standard methods of risk minimization

This practical guide will challenge you every step of the way—whether you're a risk manager, hedger, investor, or trader—and the valuable question-and-answer section at the end of each chapter offers you the rare chance to test your options knowledge before putting it to work in the real world. The book also includes caveats not covered by other option experts, which will help even seasoned practitioners avoid common mistakes.

Options offer an extensive array of profit and risk management strategies that can be deployed within the context of your own risk exposure or traditional investment portfolio—but to take advantage of these opportunities, you must be prepared. Filled with real-world examples and proven strategies, this invaluable resource will not only help you make the most of options, it will secure your success.

From the Back Cover

Options

"This is a clear and pedagogical book written with the cut-to-the-chase mindset of the practitioner and devoid of the academic complications. Vine sees derivatives from the standpoint of the trader, which is rare and refreshing."
— Nassim Nicholas Taleb author of Fooled by Randomness

"Simon Vine's new work, Options: Trading Strategy and Risk Management, combines a first rate introduction to options with an in-depth review of the complexities of the subject. An extremely helpful book that should be of great benefit both to the uninitiated and to the many 'professionals' who think they understand derivatives."
— Aleksandr M. Knaster, CEO, Alfa Bank

Written by Simon Vine, a seasoned trader with over ten years of experience on Wall Street, Options: Trading Strategy and Risk Management offers a step-by-step approach to trading, hedging, and investing with options, and shares the key concepts and essential theories behind the successful use of options in today's markets.

Comprised of short, to-the-point chapters that include challenging Q&A sections, this invaluable resource will show you how to avoid expensive mistakes and secure your success in this arena.

See all Editorial Reviews

Product Details

• Hardcover: 400 pages
• Publisher: Wiley; 1 edition (February 11, 2005)
• Language: English
• ISBN-10: 0471691283
• ISBN-13: 978-0471691280
• Product Dimensions: 9.1 x 6.3 x 1.3 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (6 customer reviews)
• Amazon Best Sellers Rank: #1,703,291 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

2 of 2 people found the following review helpful:

5.0 out of 5 stars Nice to see a book written by a trader, August 7, 2006

By 

C. Cononico (New York, NY) - See all my reviews
(REAL NAME)   

This review is from: Options: Trading Strategy and Risk Management (Wiley Finance) (Hardcover)

It's always refreshing to find a book written by a trader! Most of us in the industry have too many books authored by academics who have never managed risk for a living. This book would be very helpful for beginners looking to get into trading. It's a nice complement to find a text that can go beyond theoretical pricing mechanics and give you a feel for the market. Nice bite size chapters, good ideas, practical examples.

2 of 2 people found the following review helpful:

1.0 out of 5 stars Mr Vine, a fixed rate receiver is a IRS seller NOT buyer., December 23, 2005

By 

Solbi-wan Kenobi "notaquant" (KL, Malaysia) - See all my reviews

This review is from: Options: Trading Strategy and Risk Management (Wiley Finance) (Hardcover)

John Wiley & co owes me a couple of pages full of errata or, at least, my money back. (I note there are, at this time, 23 used or new copies of this book)
Books on options strategy and management with plenty of FX examples are few and far between. The only thing good about this book is that the chapters are bite-size. I'm only about half-way thru the book, but if I can expect a similar number of errors for the rest, then shame on John Wiley for allowing this book to publish before extensive editing.
Two handfuls of errors may not be much, but 79.95 is a lot to pay. Lucky for me I have a pretty strong grasp of the basics, but what if a beginner interbank trader got a hold of this book?
It's surprising that someone of Nassim Taleb's eminence would lend his name in editorial reviews of this book.

3 of 4 people found the following review helpful:

4.0 out of 5 stars Re-review, July 25, 2006

By 

Solb1 Kenobi "notaquant" (Kuala Lumpur) - See all my reviews

This review is from: Options: Trading Strategy and Risk Management (Wiley Finance) (Hardcover)

Sorry Simon.

Been meaning to find the time to write a re-review... with a slight improvement in the rating! haha

I didn't finish the book at the time I wrote the last review.

To date, I have, in fact, finished your book. And overall, the book was actually quite helpful. I must've had an off-day the day I reviewed it the first time.

Anyway, I figured you're just a (good?) trader after all, not a writer. A lot of options texts in the market nowadays are just a lot of marketing blather. So I'll forgive your minor short-comings.

To recap: overall, your book had a lot of good ideas. Your options examples were practical and relevant to the beginner institutional trader/risk manager. For me, the real meat of your book came from Parts 3 to 7.

I liked that your book is not US-centric, futures-centric, equities-centric, or even day-trader-centric.

And I liked the fact that all of your chapters were bite-sizes and a whole lot easier to digest.

Methinks this is the only book of its kind that I know of that caters to institutional traders/salespersons (regardless how Amazon is marketing the book), and (to a certain extent) beginner risk managers.

I won't recommend this book to a rank outsider or even Investors. I can, however, recommend this to novice traders/salespersons who would've have cut their teeth for at least 6 months before they can go into general resource books like these (and being able to recognize the difference between the mistakes I mentioned in my last review and gaps in their own knowledge! haha)

For your next edition, you might want to cover the latest exotic FX structures in more depth. And maybe you could convert your notes at the end of the book as end-of-chapter footnotes instead.

For your next book, if you can write something like the RiskDoctor Charles Cottle's latest book, but with plenty of FX options management examples (from directional trader's and/or market maker's POV) plus a CD-ROM with Excel spreadsheets and calculators, that would be great! haha

Erm... No need for a refund. Your book and Cottle's are the only desk references I use on a regular basis.

My other issues with this book:

The book is being marketed (either by the inside flaps or Editorial Reviews) as a "step-by-step" "practical guide" for "investors". Methinks while the book does have practical examples, it's not really a "practical" book over-all for the investor class. Institutional traders, maybe, but not investors.

And the book would really have to go that extra mile before it can claim the 'step-by-step" bit for investors. Can't say off-hand what that extra mile would entail; just that I don't see it yet.

However, I CAN say the book turned out to be a valuable resource.

My two cents anyway. "Step-by-step" is a very important standard for me. Hence, 4 stars, instead of 5 stars.