- Paperback: 92 pages
- Publisher: Wiley; 2 edition (November 20, 2006)
- Language: English
- ISBN-10: 1592802559
- ISBN-13: 978-1592802555
- Product Dimensions: 5.4 x 0.3 x 8.5 inches
- Shipping Weight: 5.6 ounces (View shipping rates and policies)
- Average Customer Review: 11 customer reviews
- Amazon Best Sellers Rank: #278,077 in Books (See Top 100 in Books)
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The Four Biggest Mistakes in Option Trading Paperback – November 20, 2006
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From the Back Cover
“Kaeppel beans a very bright light on 4 of the mostcommon—yet most difficult to overcome—trading‘don’t’s’. In easy-to-understand terms hebreaks down the problems and offers solutions. Keep this conciselittle gem near you at all times while trading.”
Consistently in the TOP 25 OPTIONS BOOKS on Amazon!
You can earn big profits in options trading by avoiding the 4most common—and most costly—mistakes the majority oftraders make. Software developer Jay Kaeppel shows you how to avoidcommon pitfalls option traders encounter that cause them to losemoney in the long run.
In Kaeppel’s “quick reading” styleyou’ll …
- Learn to isolate the 4 most common mistakes
- See why they are so common and easy to make
- And discover a simple strategy to avoid these mistakesaltogether
Here’s an action plan you can read and put into placeimmediately—to become a more profitable trader in notime.
Top customer reviews
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The concise text gives practical advice in simple terms. Kaeppel manages to convey a conceptual understanding of some mathematically complex concepts such as an option’s theoretical value vs. market value and implied volatility vs. historical volatility. Readers who do not have a strong background in mathematics should be able to grasp these concepts and thereby avoid making the four mistakes outlined in the book.
The book touches on calendar spreads and implied volatility skews. If these topics interest you, I suggest that you read Kaeppel’s “The Option Trader’s Guide to Probability, Volatility and Timing”.
It was refreshing to see that this author recognizes that the academic view of options is flawed thanks to commissions and liquidity. He writes from the perspective of a speculator. After reading this short guide, I learned that as a speculator I was committing these Four Big Mistakes of option trading.
The Four Biggest Mistakes recognizes that the real market behaves much differently than the theories presented in academic class. It covers four distortions in the real market not typically taught by academia:
1. Option volatility fluctuates, causing the option price to act totally out of relation with the underlying stock price
2. Lower Deltas also mean that the option is less likely to be in-the-money at expiration
3. Complex quant strategies are not fullproof; each complex strategy has a downfall
4. Quant arbitrage strategies typically do not work because of a finite bid/ask price (less-than-perfect liquidity)
These real-market distortions cause people to misunderstand how options work in reality and consistently suffer losses. To understand these mistakes, the book is concisely written in a format presenting 1) the mistake 2) why it causes losses, and 3) how to avoid the mistake.
This is the most practical guide to options trading I have ever read. It is explained in clear language, short, and will help you become a better speculator. I recommend it if you want a realistic view of the options market.