Get Rich with Options

February 13, 2008 04:42 AM

By Lee Lowell

John Wiley and Sons, 2007

223 pages, $39.95

The only thing not to like about this welcome introduction to options trading is the bombastic title. That aside, “Get Rich with Options” is one of the best trading books published in recent memory. Compact, savvy and laced with humor and energy, the text offers none of the get-rich promises all too often found in the literature of trading and finance.

It would be unfair to reveal his four favored tactics here, but experienced option traders will likely find his recommendations sound.

Lowell prefers to sell options but when he does purchase puts or calls, he insists on deep in-the-money options with aggressive deltas.

Lowell includes numerous charts of trades he has made. He even supplements these with screen images of brokerage statements documenting the trades. As Lowell says, “There are no hypotheticals or fluff here.” You get the sense that Lowell is a skilled professional eager to share his years of experience.

Lowell’s prose radiates enthusiasm. He begins a discussion of options shorting techniques with: “This might be my favorite chapter in the whole book.” Another chapter starts out, “This is it, my favorite ‘options-selling’ strategy.” Elsewhere he exclaims, “I’m going to show you so many real-life examples that your head will spin...” Lowell may be the Dick Vitale of options trading.

The book greatly benefits from Lowell’s experience on the floor of the Nymex. In one sidebar, he explains the mechanics of market making: how to set bid and ask prices on a continuous basis and, once the order is filled, how to lay off risk in the underlying market. The book concludes with a helpful listing of options Web sites along with sensible recommendations for data vendors and brokerage services.

Nelson Freeburg is editor of Formula Research, a financial letter that builds and tests quantitative timing models for stocks, bonds and commodities. It serves systematic traders and institutional money managers in 27 countries.

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