The Options Edge: Winning the Volatility Game with Options On Futures (Hardcover)

~ (Author), William Gallacher (Author)

Editorial Reviews

Product Description

With his take-no-prisoners 1994 book Winner Takes All, Bill Gallacher first carved out a reputation as a no-nonsense authority on the futures trading game. Now, with The Options Edge, he focuses on the world of options on futures, exposing the shortcomings of current theoretical pricing formulae and offering a simple, understandable, and widely applicable option pricing model without invoking any complicated mathematics whatsoever. Gallacher¿s watershed book represents nothing less than a new mindset for trading options on futures, a revolutionary approach that depends less on esoteric, theoretical abstractions and more on empirical evidence gathered from the real world of options trading.

From the Back Cover

Learn how the options market really works--and improve your odds of winning! As more and more "sophisticated" trading models are pressed into service to unravel the mysteries of market action, information overload makes trading markets progressively more unstable. Nowhere is this truer than in the option pits of the large futures exchanges, where traders struggle to put a price on uncertainty under conditions of great underlying price volatility--often using formulae of dubious value. In The Options Edge, professional commodities trader and researcher Bill Gallacher stands up and shouts, "Enough!" This extraordinarily practical book dowplays complex formulae and technical abstractions to explain option pricing form an empirical perspective, using an extensive futures and options database developed and analyzed during the years 1996 and 1997. Futures options traders needing down-to-earth answers to complex questions can look to The Options Edge for: a thought-provoking discussion and critique of the Black-Scholes option pricing formulas, and presentation of a much simpler and sounder alternative; identification of the at-the-money straddle price as the only true basis for estimating implied volatility of a commodity futures contract--and a fast and accurate way of calculating this number; historical volatility profiles for all the actively traded futures contracts; understanding of how one of the world's largest hedge funds foundered through its misapplication of the Black-Scholes formula. Profitably trade options on futures--simply, consistently, and without excessive reliance on algebra and complex statistical formulae--with Bill Gallacher's commonsense The Options Edge.

Product Details

• Hardcover: 273 pages
• Publisher: McGraw-Hill Companies (December 31, 1998)
• Language: English
• ISBN-10: 0070382964
• ISBN-13: 978-0070382961
• Product Dimensions: 8.9 x 6.1 x 1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars  See all reviews (8 customer reviews)
• Amazon.com Sales Rank: #529,756 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

6 of 6 people found the following review helpful:

5.0 out of 5 stars Highly readable and full of wisdom, April 30, 1999

By A Customer

This book is a very enjoyable read. The author uses real world data from options on futures to demonstrate where the edge really lies, allowing the trader to improve his chances. It is written in a very practical manner, showing the many weaknesses of highly theoretical option pricing models and why they rely on needless mathematics. The reader will see how options work in the real world. This book has been written by a real trader not a theorist. As a options trader myself, I would highly recommend this book.

6 of 6 people found the following review helpful:

5.0 out of 5 stars FASCINATING, February 27, 1999

By A Customer

AS a trader and market observer for over thirty years I found The Options Edge to be one of the best three books I have read on market behaviour. Since I am Mensa-challenged I allowed myself the liberty of skipping some of the advanced math. The key value of this book is two-fold--- 1)It correctly debunks the myth that "rocket scientists" know anything about the market. 2)There are many "nuggets" scattered throuhgout the book that have a critical value for anyone hoping to succeed as winning investor. Unfortunately one has to be "burned" many times to appreciate the contained wisdom. I am not sure the neophyte will grasp this message. However,it would not be wasted on all the wunderkind fund managers out there. FIVE STARS G.McAllister M.D.

7 of 8 people found the following review helpful:

4.0 out of 5 stars yes, but the risk, August 22, 2000

By	V. Escobar (Ontario Canada) - See all my reviews

The research work is better than most available and the writing very good (See his other book as well). However if somebody can answer the following: Isn't there a risk of blowing up the strategy with a string of limit days? They may be rare, but their effects are extreme (see Nassim Taleb's site and/or book). At one point limit days are mentioned; they are handled by using the price at the limit. This assumes that one can trade futures at the limit price, which is not a guaranteed thing. Otherwise, the new and refreshing look at option pricing is excellent. Clearly accuracy is more important than precision in markets with bid/ask spreads and Mr. Gallacher is able to cut to the core of the issue. Lots to consider, but that one problem remains.