Option Volatility & Pricing Review

Admittedly, Option Volatility & Pricing isn’t the most exciting book on options trading. But then again, nobody said turning a profit would be an easy or exciting task. With that knowledge, its clear you’ll need credible evidence to support a sound trading approach so don’t fall asleep yet because Mr. Natenberg does the job of mixing in plenty of profitability excitement along the way.

Option Volatility & Pricing Book Cover

The true complaint I have with the book isn’t about the information, just the scope of information. What I mean is the information covers options as an asset, not just equity options, which I trade exclusively. As such the book is difficult to navigate for those like me. However, for those that trade many assets Option Volatility and Pricing is easily the best resource on the subject.

Option Volatility & Pricing begins with a discussion and detailed description of futures contracts and options around futures contracts. So if you’re unfamiliar with futures contracts let this serve as a primer on the subject. Many advanced traders use the futures market to create hedges to their portfolio and as a bonus, the topic lends itself well to another book we’ve discussed, The Option Traders Hedge Fund.

Nevertheless, don’t be alarmed or worried too much if the information seems foreign, the book explains everything clearly and in understandable terms. So long as you understand the options market when you read Option Volatility and Pricing you’ll benefit greatly from the wisdom within.

From there the book jumps into a more statistical trading method, without saying as much, yet many sections are dedicated to probabilities and its role in the options arena. In addition, are lengthy discussions on what a trader should do to counteract poor or misbehaving positions. In any case, the argument is a credible and compelling, and deserves its due diligence. Should you decide to read nothing else, spend time with the statistical aspects as they will greatly improve your trading abilities.

I’ll close this review quickly by saying that it is without a doubt the most popular work discussing pricing or statistical expectancies of options trades. Couple this book with Mr. McMillan’s, Options as a Strategic Investment and you’ve got yourself everything, and I do mean, EVERYTHING you need to trade profitably.

To greater returns,

Jeff “The Option Boxer”