The Option Trader's Hedge Fund: A Business Framework for Trading Equity and Index Options 1st Edition

I just finished reading through Dennis and Mark's book and was struck by the fact that the authors tackled some rather complex subjects, but managed to keep the discussion at a level where it should be easily accessible to anyone with an intermediate understanding of options.As such, this book represents a excellent transition point for those traders who have begun to learn the fundamentals of options and are now ready to begin integrating options into all of their trading and investment activity.What this book provides is an overall blueprint for an individual to set up and manage their investment and trading capital much like an insurance company might sell policies, collect premiums, and manage risks. In fact, this is the premise laid out in the first chapter. The business model for "The One Man Insurance Company" (or TOMIC, as it is referred to within the book) involves the use of short option sales to generate cash while using long premium to hedge, limit and manage risk.Where The Option Trader's Hedge Fund separates itself from prior books is by taking a look deeper into the how's and why's of structuring trades. Rather than focusing upon market prices, TOMIC drills into the implied volatility of options to seek out advantages that might be exploited. It's the focus upon implied volatility that is likely to cause light bulbs to flash on above the heads of some readers. Using the discussion on volatility as a back drop, the authors then provide a run down of the five most commonly used option strategies within TOMIC along with suggested criteria for when these trades make sense and when they do not.There is also "nuts & bolts" advice about how to obtain better trade executions and demonstration of how these seemingly small savings can add up to rather significant amounts for an actively managed fund. The lesson here is that even if you're trading a small account on a limited basis, developing the skills now will pay much larger dividends as your account size and trade activity grows.Common questions are answered, such as a break down of how much capital a trader should have before trying to trade full-time and how a trader can protect their portfolio against sudden market declines such as the now infamous "Flash Crash". In short, this book represents a compilation of insights and advice that is not easily or quickly acquired. It's definitely a "must read" for the developing options strategist and trader.Christopher SmithTheOptionClub.com

Provides very valuable information around how someone can trade options for a living specially how to be consistent about making money through options. Starts off great and gives great details on the setup etc. it feels like it goes into some complex strategies too quickly and doesn’t setup some key fundamentals for those. I would have loved a chapter where key fundamentals, specially Greeks and what they mean were summarized. Even a 1 pager on those would help general traders get a lot of the content more quickly. I had to go through Google several times to grasp some concepts but overall a great read and definitely will be coming back to this as a reference throughout my trading career.

This is a book that every options trader should read. I have read it twice and use it regularly as a reference - it is that valuable to me.I have read most of the top books on options that are available, but this one stands out in it's practicality and it's ability to lay out a solid framework for options trading as a business. Where most books either stay too theoretical, rely too much on analogies, make unrealistic promises, or focus too much on a single strategy I find The Option Trader's Hedge Fund gave me not only the theory but also practical information that has improved my trading.Of particular value is the explanation of the various positions that may be traded along with under what conditions it each position will perform best. Beyond that there is a discusion on managing each type of position, such that a clear plan is laid out for most situations you might encounter. What I find particularly unique and valuable are the details on how to adjust each position for various circumstances along with the setup of what volatility environment and skew curves work best for each position. This level of detail is not something I have found in any other books on the subject - at least not presented in such a practical way.This book has improved my trading and saved me many times the price just in helping me learn how to better manage positions I was already trading. It's been even more valuable by helping me identify under what conditions I should be trading various positions. I view it as essential reading for anyone trading options. Of all the options books I have read, this one is the most useful and valuable to me. This is the one I pull out when planning trades. This is the one I pull out when I need to manage or adjust a position. I'm just a regular guy with a famly and a job who's doing his best - maybe if you are a pro it's not as valuable to you, but for me it's the most valuable options book I have.I am also grateful for The Options Insider radio and The Option Block podcast and Mark Sebastian's contributions to those free resources. That's how I found out about this gem!Sean Conrad

High quality book with well written examples of trades. However, it’s addressed rather to intermediate/advanced traders who feel the need to improve the structure of their trading activities. The One Man Insurance Company framework might be exactly what they need.