Customer Reviews

Trading Options as a Professional: Techniques for Market Makers and Experienced Traders

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

 

 

I think its an OK book (yawn), do not get me wrong, but nothing special for that price.

I would return it but I opened the CD... Bummer! And to say the least, there is nothing special in that software either! They could have have you download the package (its tiny) but a CD looks great and once your book lost its "CD virginity" you cannot return it... Sleek, but cheap.
The bottomline you do not need this CD. There are tonnes of free software that can do the same and better. Any good options trading free platform (Thinkorswim, TD Ameritrade, OptionMonster, OptionsExpress, etc.) have much better capabilities plus you can actually demo use thir full capabilities in real time. This software, on the other hand, gives you a feeling that it was developed in 1980-ies, with very little regard for convenience. It cannot pull things from the internet, like other software, it does not allow you to compare things... It claims that it has "unique capability" to calculate the possibilities of "touching", etc, which is laughable, because its not unique at all! Most of the free platforms have it even in demo versions for "paper trading"and much more... If you want a standalone package check out free OptionsOracle, as an example. The book's software the Op-Eval PRO, uses very minimal graphic capabilities and gives an appearance of something "schlepped together" in a couple of days... In short - there is nothing "Pro" about both the book and the software, sorry. I would have given a book the 3 stars if there would be no software in it at all.

However the book itself grabs your attention from time to time, gives good examples of trades and trade adjustments. But this is not an advanced book, let alone a book for market makers of anything remotely "professional". I guess it would be a good and thorough intermediate book if it would be better illustrated and use better explanation approach, but to claim to be an advanced book (let alone for professionals and market makers) it has to be o-oo, so much, much more...
Those who want a real adventure into options check out Maestro Charles Cottle's books! That will keep your brain occupied for a while and you will find yourself coming back again and again and finding more and more there as you progress as a trader... Just to make it clear, I am not affiliated with Charles in any way, except having his picture right in front of me on my trading desk and having many conversations with him while I am asleep :)
Options Trading: The Hidden Reality ("Options: Perception and Deception" & "Coulda Woulda Shoulda" revised & expanded, Printed in Color)

BTW, I think Mr. Bittman, the author of this book is very knowledgeable, his definitions are precise and I never stumbled on any errors, which are numerous in many other books on options. But knowing a subject and making a book about it interesting and thought-provoking are not the same. McGraw Hill is usually very good at publishing such books, I almost never hesitate to buy anything they publish.
So, it gives me no pleasure whatsoever to leave a negative review in this case and I much hesitated before I finally posted it and I sincerely apologize if I insulted the author (but not the programmer, I actually feel insulted myself by the quality of the program sold inside a book that claims to be written for professionals and market makers!)
So may be I am wrong.
But this is my honest opinion.

James Bittman is a master teacher. I learned that when I bought an earlier book of his, "Options for the Stock Investor" (OSI). If you're an experienced options trader, you will benefit from reading any of his books. If you're green when it comes to options (as I am), then Chapter 2 of OSI is worth the price of the book all by itself. Once you've gotten familiar with basic options jargon (which Chapter 1 will help you do), and assuming you know what a stock is and what trading on the market is about (if you don't, there are tons of books out there to teach you the basics), then you can read Chapter 2 quite easily. What Chapter 2 ("How Options Work") does is teach you what a profit-loss (P/L) diagram looks like, what it's for, and, most importantly, how you yourself can construct one, given certain basic options data. Never, never, never have I seen another book that does this. The number of books on options is legion, and many of them include complex P/L diagrams. You begin reading, and the author just assumes you know what you're looking at. Well, I'm willing to wager that most people, even many experienced traders, DON'T know what they're looking at. When you've finished Chapter 2 of OSI, you will not only know what you're looking at, but you'll be able to take the diagram apart and put it together again. A P/L diagram gives you a compact "picture" of the risk-reward relationship of any open position at the time of expiration. And if you're at all concerned about good money management, and being able to assess the probabilities of getting into and out of a winning position, this is information you can't do without. If you're not interested in such things, then go into some other business, but don't trade options.

Bittman then goes on to discuss option pricing, call buying, covered writes, and various more complex strategies in subsequent chapters. And I found that I could get through all of them, once I had mastered the basics in Chapters 1 and 2. So, what does all this have to do with the book I'm supposed to be reviewing, "Trading Options as a Professional" (TOP)? Well, having read OSI, I thought I couldn't do too badly by purchasing it as well.

I was right. TOP is subtitled "Techniques for Market Makers and Experienced Traders." Don't you believe it. What I mean is yes, the book is written for them too. But if you've read OSI, you'll be more than ready to dive into this book. The author goes over basic concepts of options trading, and then in separate chapters discusses such things as option pricing, the option Greeks, synthetic relationships, arbitrage, the all-important (and usually misunderstood) subject of volatility, delta-neutral trading, and so on. One of my favorite chapters is Chapter 5, which is about synthetic relationships. This is the first time I've really understood what this is about. Like every other chapter in the book, this one is full of tables which illustrate what the author is trying to tell you. In fact, he makes it so simple that even I can get through it.

But the real bonus in TOP is that it teaches you to think like a market maker. This is a dimension of options trading which very few books even attempt, and ever fewer attempt successfully. Chapter 9 gets into this. You can go online to your favorite trading platform (I happen to like Think-or-Swim (TOS)), click on the button, and enter an options position. But if you do it by trading at the market bid or ask prices, the market makers will just love you. Well, they're not supposed to love you; they're not your friends. Like you, they're out there to make money, and they're very good at what they do. So had you better be. Of course, you can trade options the way I've often played Texas Hold'um in Vegas. Go into the poker room, sit down at a table, and you can assume that about 2/3 of the people at the table with you don't know what they're doing. You know they don't, because they play every hand they're dealt. The pros at the table eat them alive. It seems they just love giving away their money.

The market is very much like the poker table. In options trading, there's always someone else on the other side who's taking your bet, or making a bet which you (as option writer) take. Many of them are professionals, and these include market makers. And they're not stupid. This is what Chapter 9 is about. When you've read Bittman's books, you not only know the mechanics of options trading, but you're in a position to go into the real world and trade them. Of course, there's no substitute for actual experience. But then, nowhere is it written in stone that you have to wipe out your portfolio to get it. What you need is a "feel" for the market. And these books will move you a long way in that direction. And I haven't even touched on the Op-Eval Pro software that comes with the book. (I only wish that in future editions of the book, he would offer a MAC-compatible version of it.)

The only person who writes as well as Bittman is me, but I'm not an options professional, nor do I have years of experience trading and teaching at the Options Institute (at CBOE) as he does. So you're stuck with him. Be glad for it, and by all means, buy both of these books. The only suggestion I would make is that the author should publish a workbook to accompany this book. But even without one, you can go through the examples he provides and make up your own. Take it from me: you can waste a lot of money on options books, and all you'll accomplish will be to realize that you need even more books to tell you what the books you already have don't. Save your money, and a lot of time (that you could spend trading and making money), and buy these two books. The only thing left for you to do will be to get out there and trade. (I would strongly advise trading play money at first. If you can't do that, you won't know how to trade the real stuff. Again, TOS offers a superb paper-trading facility.)

Until this book, the de facto standard for options traders was Option Volatility & Pricing: Advanced Trading Strategies and Techniques by Sheldon Natenberg. Natenberg published a great book in 1994, but it feels like it was nearly a century ago. "Back in the day" of open pit trading and when pricing disparities could be found for an edge. Those days are long gone by.

In this century - with an electronic and highly liquid market - the rules have changed and we need a new book.

Bittman (who works at the CBOE) has done a fantastic job authoring what should be considered the "New Standard" for options traders. This book is intended for today's professionals, but more experienced personal investors who want to learn more about options trading, should find the book very helpful.

It also comes with a useful PC program for options analysis. It's a handy tool to model options pricing behavior.

This book is a "must own" for all professional and serious options traders.

There are so many "I have the secret to making millions in options" books around that it's clear that there is no secret. Unless, of course, you realise that the secret is in the knowledge as to how these devices work. And Bittman gives us that knowledge (yet again). It's a dry book, no razzamatazz, but Bittman is an educator, not a salesman. This is a worthwhile re-read for experienced traders but, I think, a must for all would-be traders, many of whom won't come to it until they've lost a sizeable sum to the market.