Sunday, May 26, 2013

A review on trading option Greeks

A few years ago, I attended a couple of Dan Passarelli's live Webinars and remembered him as one of the most knowledgeable and passionate option trading educators. Recently, I bought his book "Trading Options Greeks: How Time, Volatility, and Other Pricing Factors Drive Profits (Bloomberg Financial)". I did spend sometime reading interesting sections of the book. So I created an initial post on the summary table of the effects of prices, time and volatility on option Greeks and another study on the implied volatility and its time decay. Since this book is pretty useful for me, I'd like to share some thoughts on it with my readers.

Compared with a couple of other option trading books I have that cover similar topics, this book describes a mathematically simple way to manually calculate approximate option price changes using the option Greeks. It is a unique part of this book that it uses many examples to illustrate how to estimate option price changes using the option Greeks with approximation equations that involve a few addition, subtraction, multiplication and division only.

I consider this book an intermediate level one for option traders that require a solid understanding of the Greeks, as this book goes a little further beyond the introduction phase. It explains what the Greeks are, and more importantly, how the Greeks change under various scenarios which is missing in most other option trading books. This book also gives introductions about various option spread strategies and volatility spreads in particular.

I don't consider it as advanced level, as it rarely describes Greeks and their changes at option portfolio level or for complex option positions. It's not an option trading system book as well, since it does not offer any specific criteria for trade entry, exit or adjustment. To get more detailed descriptions about the 5-star user rated book (as of today) and other reader comments, you can click on the book image below.

1 comment:

  1. Hello Charles:

    Would you please share a list of must read books for those who are seriously trading options?

    Thank you,