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McMillan on Options Hardcover – October 4, 2004
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From the Publisher
Thousands of investors turn to Larry McMillan, leading finance writer and advisor, for expert advice on options. In this reader-friendly book, McMillan offers the latest information on the high-profit world of options trading. This up-to-date guide provides an information-hungry marketplace with in-depth coverage of pricing strategies, volatility and risk control, hedging techniques and option philosophy, as well as key insights into the predictive power of options, the versatile option and buying and selling. Real-world examples provide hands-on applications and clear illustrations to turn theory into practice. --This text refers to an out of print or unavailable edition of this title.
From the Inside Flap
The McMillan name is virtually synonymous with options. Over the years, this legendary traders popular and informative books, newsletters, and seminars have helped both new and seasoned investors use options to consistently enhance their trading profits.
McMillan first shared his personal options philosophies and techniques in the original McMillan on Options. Now, in this revised and expanded Second Edition, he reveals a number of new approaches for success in todays fast-paced and ever-changing investment arena.
By exploring both the flexibility and predictive ability of options, this highly revised resource will show you the best new ways to apply options to everyday trading situations. Youll quickly learn how to establish self-contained strategies, substitute options for other financial instruments, and protect your positionswhether in stock, index, or future options. More importantly though, youll receive a complete education in the exciting new products that are popular with investors, from single-stock futures and exchange-traded funds to LEAPS and the brand new volatility futures.
Backed by over 100 case studies, updated charts, and new examples, McMillan on Options, Second Edition:
- Illustrates how a stock can be "pinned" to a striking price at expiration, what causes it, and when to expect it
- Discusses put-call ratio charts and theory on individual stocks
- Examines how to use volatility indices as an accurate market predictor
- Adapts trading systems and strategiessuch as intermarket spreads and seasonal trading systemsto the realities of a new market environment
- Presents advanced approaches to options trading, including the concepts of expected return and Monte Carlo probability simulation
- Offers guidance for those who need to find reliable options trading data and tools online
This timely Second Edition also expands on discussions regarding the NYSE as a faulty indicator, the history of market volatility, and the importance of buying and selling volatility.
Readers can now gain a unique insight into McMillans personal philosophy on options, and discover the innovative new tactics and strategies he applies to his own trading and analysis. Packed with hands-on examples and techniques that address hedging and volatilityplus fresh new pricing conceptsthis comprehensive and updated work will help you understand and unleash the full power of options.
Top customer reviews
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A Bit Expensive and a Bit Outdated. You may not want to pay 79.95 for a book that was first published in 1994. In the second edition, which was published in 2004, McMillan adds a few more example trades, but the bulk of the book remains dated. For example, options are priced as fractions rather than decimals, and terms like "high" and "low" would assume new meanings when applied to more recent markets.
When discussing high and low volatility (page 283), McMillan states he rarely has seen the CBOE volatility index (VIX) trading below the historical volatility of the S&P 100 (SPX). Last year the VIX traded below the SPX volatility for at least three months (May, June and August). In other words, last year's market was far more volatile than the markets upon which this book is based.
Not for Beginners. Several reviewers suggest that this book might frustrate beginners to the point that they would no longer want to trade options. I found the book readable, but McMillan should not have assumed that readers understand the difference between equities and futures; particularly when most beginners do not trade futures. Also, many of his strategies for trading equity options do not work for futures (and vice versa).
Impractical Advice. I was disappointed with McMillan's discussion of the Greeks (page 483) particularly Delta, Gamma and Vega. While he clearly explains how to balance a position to be Delta/Gamma neutral with limited Vega risk, he fails to reveal the practical advantages of doing so.
Supposedly, a position that is Delta/Gamma neutral would be less sensitive to price movements of the underlying asset and more sensitive to changes in the asset's volatility. However, to achieve this neutrality, I had to increase the size of the position far beyond what I was willing to risk. One of McMillan's neutral positions, which also limits vega risk, comprises 555 contracts (page 505). The commission alone on such a trade would be well over $1,000.00. In his summary, McMillan concedes that these are "theoretical examples" (page 516). However, none of McMillan's real trades appear to apply this theory.
Despite these problems, this book is well-worth having, and more importantly, it will make you a better trader.
I don't have a better suggestion because options are not really my thing, but I would love if somebody has a better book to recommend. Please add in the comments section.