Option Volatility & Pricing: Advanced Trading Strategies and Techniques (Hardcover)

~ Sheldon Natenberg (Author) "Every option market brings together traders and investors with different expectations and goals..." (more)
Key Phrases: option arbitrage, position analysis, elementary strategies, Volatility Spreads, Chicago Board Options Exchange, Chicago Mercantile Exchange (more...)

Editorial Reviews

Product Description

One of the most widely read books among active option traders around the world, Option Volatility & Pricing has been completely updated to reflect the most current developments and trends in option products and trading strategies.

Featuring:

• Pricing models
• Volatility considerations
• Basic and advanced trading strategies
• Risk management techniques
• And more!

Written in a clear, easy-to-understand fashion, Option Volatility & Pricing points out the key concepts essential to successful trading. Drawing on his experience as a professional trader, author Sheldon Natenberg examines both the theory and reality of option trading. He presents the foundations of option theory explaining how this theory can be used to identify and exploit trading opportunities. Option Volatility & Pricing teaches you to use a wide variety of trading strategies and shows you how to select the strategy that best fits your view of market conditions and individual risk tolerance.

New sections include:

• Expanded coverage of stock option
• Strategies for stock index futures and options
• A broader, more in-depth discussion volatility
• Analysis of volatility skews
• Intermarket spreading with options

About the Author

McGraw-Hill authors represent the leading experts in their fields and are dedicated to improving the lives, careers, and interests of readers worldwide

Product Details

• Hardcover: 470 pages
• Publisher: McGraw-Hill; 2nd edition (August 1, 1994)
• Language: English
• ISBN-10: 155738486X
• ISBN-13: 978-1557384867
• Product Dimensions: 9 x 6.1 x 1.4 inches
• Shipping Weight: 1.8 pounds (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (66 customer reviews)
• Amazon.com Sales Rank: #2,371 in Books (See Bestsellers in Books)

  Popular in these categories: (What's this?)

  #1 in	Books > Business & Investing > Investing > Options
  #1 in	Books > Business & Investing > Investing > Commodities
  #3 in	Books > Business & Investing > Investing > Futures

Customer Reviews

Most Helpful Customer Reviews

194 of 201 people found the following review helpful:

5.0 out of 5 stars The Classic, Essential Options Text, June 4, 2000

By A Customer

I have been a professional options trader for over 11 years. In my experience most options traders fail, and for two reasons: naive faith in mathematical models and software, and a basic misunderstanding of the concept of impled volatility.

This is the one book that everyone who has worked for me has been required to read: it is ESSENTIAL. There is no other book that covers these topics in the the way that market practitioners think about them, nor does Natenberg forget to include anything that's really useful.

I have to agreed with another reviewer: understand and study this book! Options trading is a zero-sum game. Professional traders have the edge and been earning a good living from the ill-prepared, arrogant, and naive for years.

90 of 92 people found the following review helpful:

5.0 out of 5 stars Another book the CBOE should force all traders to read!, January 13, 2001

By	Rob Ryley "Robert" (Northeast NJ) - See all my reviews

If you trade options, you will quickly learn that it is essential to understand the concept of volatility. Natenberg explains the concept of volatility in great detail, and shows how this concept applies to different option positions.

Natenberg not only takes great pains to explain the concept of volatility, in addition to other inputs into an option pricing model, but clearly shows that option pricing isn't the exact science many seem to believe, for the simple reason that we never know if our volatility estimate is correct. I suspect many traders just don't understand the severe limitations current models have in different situations (ie. how the Black-Scholes model underprices options near expiration).

For the mathematically inclined, there are ample formulas and equations in the appendix.

Read it, study it, and apply the concepts to develop your own trading system.

46 of 46 people found the following review helpful:

5.0 out of 5 stars Great options book, January 20, 2004

By	magellan (Santa Clara, CA) - See all my reviews (TOP 100 REVIEWER)    (COMMUNITY FORUM 04)

Perhaps the most amazing success story in the markets and investing in the last 10 or 15 years is the growth of the options market, and the advent of inexpensive trading for derivatives such as options, allowing even the small and amateur investor to use these vehicles if he or she wants. I've read that the options market has grown more than ten-fold since the 80s, even more so than the stock market. This book will help you advance your knowledge of this important area of the market.

This is one of the few really high-level options books that are understandable without advanced math. I have a couple of other books on options and derivatives, and they require advanced calculus. It's still geared toward the professional, but as an amateur I still found it interesting and worthwhile reading. Be advised you'll probably still need to read an introductory book or two on options before tackling this volume, which is what I did. But after absorbing those two books, I found I had the background to read and appreciate Natenberg's book. Natenberg discusses all the advanced concepts so you learn such things as how to do butterfly option spreads, synthetic puts and calls, volatility spreads, how to remain delta and gamma neutral, and other such advanced concepts. Overall a great book and essential reading for anyone who wants a better understanding of this important area.