Options as a Strategic Investment: Fifth Edition by McMillan, Lawrence G. By Lawrence G. McMillan

This is a reference book of over 1000 pages. Not a sit down and enjoy a good novel. I found I would skip through the pages and then focus on a part that caught me eye. A beginner would realize there is a lot in the book than just what is a PUT or Call. If you want to learn about options then you should have a copy of this in your library. Programming Bible of Options. Everything has been elaborately explained by author. This is the ultimate book of Options. But still people looks for subscription in financial agency this is ridiculous Programming A big book. Not something that I can read right away. But good to have in collection. Covers all the strategic options criteria. Programming Text book is great. Workbook a little rudimentary. This is the options book to start with for beginners imo, then would come Natenbergs Programming

The market in listed options and non equity option products provides investors and traders with a wealth of new, strategic opportunities for managing their investments. This updated and revised Fifth Edition of the bestselling Options as a Strategic Investment gives you the latest market tested tools for improving the earnings potential of your portfolio while reducing downside riskno matter how the market is performing.

Inside this revised edition are scores of proven techniques and business tested tactics for investing in many of the innovative new options products available. You will find:

Buy and sell strategies for Long Term Equity Anticipation Securities (LEAPS)
A thorough analysis of neutral trading, how it works, and various ways it can improve readers overall profit picture
Detailed guidance for investing in Preferred Equity Redemption Cumulative Stocks (PERCS) and how to hedge them with common and regular options
An extensive overview of futures and futures options

Written especially for investors who have some familiarity with the option market, this comprehensive reference also shows you the concepts and applications of various option strategies how they work, in which situations, and why; techniques for using index options and futures to protect ones portfolio and improve ones return; and the implications of the tax laws for option writers, including allowable long term gains and losses. Detailed examples, exhibits, and checklists show you the power of each strategy under carefully described market conditions. Options as a Strategic Investment: Fifth Edition by McMillan, Lawrence G.

Lawrence G. McMillan È 9 Review

Great book to read if you're into investments Programming The option trader's bible. Programming The book is voluminous. It has grown over the years. It contains lot of information and author's wisdom, no doubt. I think one trying to trade options should buy this book and refer to it to get theoretical understanding of option strategies, P/L curves, nuances of each strategy etc.

But the following are the issues I have seen with the book
1. Although it has tons of strategies, the key strategies used by traders these days are missinge.g. Iron Fly, Jade lizard, unbalanced strangle etc.
2. Overall emphasis is on defined risk strategies. That is fine in US market where you can dramatically reduce your margin requirement using defined risk strategies. But in India that does not work. Sebi in her infinite wisdom has decided to ask for same margin even if risk is lot lower in defined risk strategies. So for iron condor (defined risk strangle) and strangle (undefined risk) will need almost same margin. In India you have no advantage using defined risk strategies from return of capital standpoint. Keep this in mind while reading this book. Adapt to Indian market conditions.
3. If you are option seller like me then you may want to get hold of the book that focuses only on option selling. Because you get tired of reading only about option buying. Option buying is low probability trade.
4. The author had trashed straddle as high risk trade and covered it in few pages. If people are trading straddle ( or options are being traded at strikes same as CMP) then those traders are not idiot. There must be some risk reward that encourages traders to trade those options. The actual quantitative research on straddles is eye opening. Look at actual data and then decide not because some book says straddle is to be avoided.
5. Important variable for the option seller is current IV with respect to past history. This is not highlighted in strategies. One reason is author has not focused on option writing.
6. No advice or suggestion on managing profits and trade. The option traders hardly wait to get last paisa or wait till the last day of epiry to take the profits or take the loss. The option trading is very volatile and it has its own best practices discovered by veteran option traders over the years. The author does not touch this important topic.
7. Although this book covers tons of strategies the professional option traders only trade few profitable ones. And few of those are missing in this book. In Indian context it is even important. In Indian context you may rely on 3 4 strategies max. So you may want to be selective while reading his book because otherwise you may spend lot of time reading something which you may never use in life. Use this book as reference book only. Do not read from first page to last page.

Looking at such weaknesses it is clear that, based on this book you cannot successfully trade the options. You need to learn from the practitioners the nuances of option trading like managing profits, stop loss, entry criteria etc.
But you can get the theoretical underpinning of different strategies though from this book. That is why I said it is good place to start your journey. Programming I got this book so that one day I may eat sweet tendies with the autists of WSB. Programming Lot of theory.
Missing pictures everywhere.
Missing volatility and time effect in option charts.
Missing best entry (exit) points as that matters Most, as it creates pnl. Theory is nice, but credit received at entry with higher credit at exist is a loss no matter the strategy profile show its still in profit zone based on underlying price.
For each strategy, you have commissions, huge bid ask spreads, volatility, decay or huge margin against you. In the end, you still have to be right like when purchasing stock. That's why I completely miss the timing of trades, and stock charts.
Although it's from year 2012,it feels outdated when talking about big strike differences, skipping weeklies.
So far read the parts about option strategies, will update. Programming