Trading Options Greeks: How Time, Volatility, and Other Pricing Factors Drive Profits (Bloomberg Financial)

Learning to trade options has definitely been a challenge. When I first started, I would get panicky because I could not tell why I was losing money. Dan Passarelli's book on the option greeks helped take the mystery out of it for me as well as helped me learn how to better manage my trades. My first trading coach would have us measure our risk based only on absolute risk, ie if the value of our trade went to zero. But think about it: how many trades have you lost money on because the value of your call, put, or spread went to zero? Probably very few. Nearly all of my losses have been because of day-to-day, incremental risk, and this is what the greeks help us measure. Learning about the greeks is helping me improve my results immensely, and this book has been a huge part of that. Here is a snap shot of some of the things I've learned that have helped me use the greeks to better manage my trades: - Why I make or lose money because of delta and how to use delta to determine when to take profits or cut bait - How to calculate a new delta based on gamma - How to use vega to predict if my trade will make or lose money based on a rise or fall in volatility - Why sometimes it's important to impose a time stop due to theta eroding the value of a long position - The importance of measuring your entire position in regards to each of the greeks (because the greeks are cumulative) As a former market maker, Passarelli used the greeks every day in his trading, and while he takes the time to explain concepts as advanced as gamma scalping, he also breaks things down in simple terms with real-life examples, especially at the beginning. So while there is plenty in here for the advanced trader, novice traders will also find value and have an excellent guide they can use as they grow as traders. This book has a prominent place in my trading library. Passarelli's other book Market Taker's Edge is also a great book and may be easier to digest for those who are brand new to trading. I highly recommend both.

So far so good , I haven't finished the whole book but its really good at explaining concepts and strategies that I have applied in my portfolio. Understanding Volatility is key and Dan Passarilli doesn a great job

Quick delivery and the book arrived in excellent condition. Super helpful material for brushing up on the topic!

I am still reading this book and I find this a very useful book. This book is for intermediate level to advanced level option students and professionals. CBOE website has lot of info on option greeks (all free in webcasts section, where one can download presentation and also go through the webinar). This is the book that shows the details of option strategies and brings it together. Author gives examples of what one is buying or selling based on option greeks (selling theta, buying vega). This book complements with other books and texts that I have. In order to implement and/or see what author is suggesting one certainly needs an option calculator or website (most brokers give this). The following resources will help (no particular order or preference). Bottom line, need a option calculator with greeks, list of options strategies and adjustments one can make and see the P/L. 1. Jabbour (option trading handbook), great book, that gives details of all adjustments without greeks. I have the first edition. Second edition is out, I do not have it. 2. Most important spreadsheet is from optiontradingtips.com (awesome to see the plot of profit / loss and play with it) to make new trades or adjustments. Easy to play with. This along with CBOE webinar's explaining expiry profit/loss table that you can hand calculate in 5 minutes will show the exact strategy. Or use the spreadsheet and see all the greeks and P/L. One can add a stock (short or long) in the spreadsheet and what happens. The author of this spreadsheet is generous to give this free spreadsheet. 3. John Hull's book on Options for MBA/Finance and CFA students (textbook, I have an old edition that is good enough), chapter 14 (and solutions are free) on Option sensitivities and Option hedging is excellent. This chapter is pretty much what Trading Option Greeks author (Dan Passarelli) is talking or alluding to. Author Dan's approach is good with lots of examples and practical from a professional trader point of view. 4. Finally get both books from Dr Samir Elias (Generate Thousands and explosive stock trading) to see how to blend technical analysis with Option strategies. (note: I am not a related party to any of these folks) I feel the author could add lot more examples in future editions.

Whew, this is a challenging concept to undertake. If you are not an Options nerd, it will be even more challenging. However, the author has collected the essential information you need to understand the fundamentals of Options trading into one comprehensive book. Understanding Options Greeks is essential for all levels elsewhere of Options trading. You must learn the Greeks! I will be rereading this text for years to come.

IMHO, this book is really suitable for inexperience investor, who is new to the world of options. I place this book between "hello world" and "3 months after trading for money from your account". Definitely, it is not really an ABC, but gives good and detailed view on one of the most important aspects of option trading. On top of that, author shares bits of his personal experience, and THAT is valuable. His insight from market maker perspective is worth of buying the entire book, to my mind. Overall, the book has captured a place in my library and I strongly recommend to have this as a reference text and nice reading. Congrats to the author on beautiful piece of work he delivered.

A comprehensive book for the one who wants to understand the inner workings of Options. It is an intermediate level book. You should have some prior experience trading to take full advantage of the book. Or at least you need to be familiar with options and how it works.

Having just finished the book, I can say definitively, this is essential reading for anyone venturing into options trading, and it's definitely money well spent. There are errors in the book as pointed out by other reviewers. Typographical errors can be overlooked, but some errors are in-congruent with the actual explanation of key topics, for example, page 228 the author states "the more expensive options are being sold, the less expensive bought" when describing a debit spread? On page 229 he is discussing a Jan/Feb diagonal spread, yet refers to an August expiration from the previous example? On the second to last page he adjusts an iron condor by rolling the credit legs but buys the 39 call/sells the 40 to a debit spread? The worry is that these type of editorial errors, lead the reader to ask "have I missed something in the explanation, or has the author made an error". One word of warning to prospective readers is in the over use of hyphens, in the worse possible places, that mislead the reader into thinking they are minus signs in formulas. The other issue is with the introduction of put call parity. I didn't understand why the author introduces it so early in such a vague way. I then went on to Wikipedia for a more digestible explanation. Then having reached chapter Chapter 6, the book gives a thorough and comprehensive breakdown of the topic -which for me could have been introduced earlier (should have jumped to chapter 6, then gone back to it). My criticisms are submitted to be constructive, not overly harsh. I do commend the author for qualifying all his workings with explanations. As I say, this is a worthy buy delving into the nuts and bolts of options trading. Would I buy the book again, despite these editorial oversights?- definitely. Despite the mention of gamma as a second derivative, all of the maths needed, is basic addition, subtraction and multiplication, so don't be put off buying it for fear you need a degree in maths.

Excellent reference book on advanced options concepts!

Livro excelente. Com pouquíssimo uso de equações matemáticas complexas, o autor consegue passar um bom nível de conhecimento sobre as gregas e operações com opções. Vale muita a pena.

Allora a livello tecnico e di ricerca matematico/finanziaria il libro di Hull rimane il primo in classifica. Tuttavia devo ammettere che questo è davvero molto interessante perché tralasciando le formule matematiche riesce a far comprendere concetti piuttosto difficoltosi. Ottimo per un approccio operativo alle opzioni.