Customer Reviews

The new options market

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

 

 

Mr. Ansbacher has done what seemed impossible: he has written a book about the complex world of commodity options- and more specifically S&P 500 index options- that doesn't require a Ph.D. to understand. And to boot, the ideas in the book actually work.

I am a professional commodity broker, and like many of you I've bought books about the complex world of futures trading, only to get home and find that a background in computational physics was required to get any further than the introduction page. What Mr. Ansbacher has done is to demystify a subject that many people (even professionals) don't really understand, even though they've read books on the subject and pretend to know: option trading.

Mr. Ansbacher's approach isn't what one would call simplistic. To the contrary, his approach is very exacting, methodical, and concrete. It's just that he has avoided lapsing into language that most readers couldn't grasp. And his approach will make many people who speculate in commodity options think twice about what they are doing.

The complex world of commodities is one where the investing public is constantly pitted against the professional traders, with predictable results. Mr. Ansbacher attempts to show the average (losing) trader the folly of what it is he's doing, and provide a roadmap to success and greater understanding. Anyone who wonders why he is losing money trading options should close his account, buy this book, and "go back to school." Highly recommended.

The strengths of this book are the clarity with which it has been written, the numerous practical examples provided, and most importantly, the opinions which the author, an experienced options trader, freely provides. Ansbacher has avoided dealing with the complexities of options such as the Black-Scholes pricing model, the greek sensitivities, etc., instead focussing on the basics: common strategies and analyzing what to do when things don't work as planned (in contrast to Fontanills' whose examples always make money!), but it is his experience which really shines. Reading this book is straightforward, owing to its conversational tone and is really like having an experienced options trader at your disposal -- Ansbacher is no flake, he's traded SPX options for years and runs a successful hedge fund....This one belongs on the bookshelf with McMillan and Natenberg...

I found this book very useful in bringing people back to reality as to the speculative nature of option trading. It even includes very good advice as to how to avoid (or mitigate if you will) losses. I only gave 3 stars to this book as it does not provide strategies as to how to pick correct stocks, and as they say, winning in options is 90% stock selection and 10% option trading.

It is a good purchase for anyone starting in this business. Wish you all luck.

If you are serious about trading options, BUY and study this book! Ansbacher explains the concepts needed to understand options in clear and nontechnical terms. Often he is brutally honest in ways the force you to think. The most valuable parts of the book are the strategies that he provides for each type of trade to inform you of what action to be prepared to take if (and when!) the market turns against you. Ansbacher repeatedly tells you that it is not easy to make money with options, but the thesis of the book is that if you approach options trading with some of the strategies he shares, you will be able to keep the premiums you collect and not get an ulcer. His ideas about trading two-strike prices out and about how to easily figure the margin requirements on options are well worth the price of the book. The purpose of this book is not to tell you how to find good stocks for writing options; the book's purpose is to provide you with sound strategies to be successful once you identify stocks in which you are interested. If you want to identify the good stocks, spend a few dollars and sign up for a program like VectorVest. Then you will have both the process and the content for success...

The book is a very good introduction of options for the very beginners. You won't find there advanced strategies like "Short Iron Butterfly", but the basic strategies are covered in a very friendly matter. The book assumes that you are already familiar with the stock market to some extent and have traded stocks but not options. If you need a much deeper book on options, I would recommend "The Options Course" by George A. Fontanills and Richard Cawood.

Pros:
- Simple strategies like selling covered calls vs naked calls are very well covered;
- The book is quick to read, only the most essential topics are covered, in concise way.

Cons:
- Appendix chapters about selecting the right broker, or about computer software, are outdated;
- An important technique of selling puts as a way of buying the underlying security is not covered in this book. If you are interested in this issue, read chapter 19 of "Options as a Strategic Investment" by Lawrence G. McMillan.
- Doesn't have a single reference to other books.

Ansbacher opens by stating that "basically the strategies [for using options] are as true today as they were 25 years ago". So much for the title "The NEW Options Market". As far as rating it a "bible of options books" from "one of today's most experienced option brokers and traders" is concerned, I'd hate to see an average book on the subject.

If you want to TRADE options then forget this book. The author has the firm belief that an option should be held till expiry. He therefore fails to sufficiently discuss the effects of dynamic variables on option price and leaves the reader with as good as no tips or strategies for TRADING options.

Technical traders will find this book insulting. The author assumes for the purposes of developing his strategies that in the end we all gain no more than the market average. It may be a contentious point but enough people believe in the merits of technical analysis and would have expected its consideration in a "bible of options", with a discussion and strategies for trading options in the short term.

In the book's synopsis (above), Jack Schwager rightly points out that the book is "aimed squarely at the ordinary investor". The lavish appraisals of Messrs Maclean and McMillan only do a disservice to their own reputations.

For the more conservative `investor' this book may be sufficient as a basic starter. Short term `traders' will be left with little more than could have been gleaned from basic info on web sites. For me the book left important questions unanswered. Spare yourself the frustration - spend a little more money and get a more comprehensive book!