by Larry McMillan.
There are hundreds of books out there about options and some may be useful reading beyond this one but every serious analyst should start here.
What is great about this book is that it builds up from the very foundation of options in a clear and unambiguous fashion without any extra fluff. It starts with the very simplest of options and expands into nearly everything that an equity analyst would need to know and then some.
McMillan is also practical when it comes to treating options as a strategy and not just an instrument. For every construct he describes follow-up strategies that are needed when using options.
There are several reasons to invest the time and effort in mastering this book but the ones that stick out for me are the fact that many of even the best institutional investors don’t really feel comfortable with options so you can sometimes add value. Secondly they are a very effective way to improve risk adjusted returns beyond simply buying straight equity.
This is a 900-page beast of a book but for me it was a pleasure when I devoured it back in the late 1980’s. It has brought me many happy returns and you will never be lonely or bored if the options price page from the WSJ or IBD is around somewhere.
Stock options are covered as part of the training and qualification process for equity analysts but most of the time they are ignored or unused which is a shame.
Part of the reason is that many people just don’t feel comfortable with options even after they are explained clearly. We know really smart people who just don’t understand what it means to be “short a call option” on a stock.
Option lovers eagerly dive into more esoteric vertical and horizontal spreads, straddles and so on which leaves the uninitiated even more in the dark.
Options are your friends. A close colleague of mine used to refer to stocks simply as “options without an expiration date” which is true of most technology and growth names since they don’t pay dividends. It illustrates a way of thinking.
The best book I know on the subject is called Options as a Strategic Investment by Larry McMillan.
There are hundreds of books out there about options and some may be useful reading beyond this one but every serious analyst should start here.
What is great about this book is that it builds up from the very foundation of options in a clear and unambiguous fashion without any extra fluff. It starts with the very simplest of options and expands into nearly everything that an equity analyst would need to know and then some.
McMillan is also practical when it comes to treating options as a strategy and not just an instrument. For every construct he describes follow-up strategies that are needed when using options.
There are several reasons to invest the time and effort in mastering this book but the ones that stick out for me are the fact that many of even the best institutional investors don’t really feel comfortable with options so you can sometimes add value. Secondly they are a very effective way to improve risk adjusted returns beyond simply buying straight equity.
This is a 900-page beast of a book but for me it was a pleasure when I devoured it back in the late 1980’s. It has brought me many happy returns and you will never be lonely or bored if the options price page from the WSJ or IBD is around somewhere.
by Larry McMillan.
There are hundreds of books out there about options and some may be useful reading beyond this one but every serious analyst should start here.
What is great about this book is that it builds up from the very foundation of options in a clear and unambiguous fashion without any extra fluff. It starts with the very simplest of options and expands into nearly everything that an equity analyst would need to know and then some.
McMillan is also practical when it comes to treating options as a strategy and not just an instrument. For every construct he describes follow-up strategies that are needed when using options.
There are several reasons to invest the time and effort in mastering this book but the ones that stick out for me are the fact that many of even the best institutional investors don’t really feel comfortable with options so you can sometimes add value. Secondly they are a very effective way to improve risk adjusted returns beyond simply buying straight equity.
This is a 900-page beast of a book but for me it was a pleasure when I devoured it back in the late 1980’s. It has brought me many happy returns and you will never be lonely or bored if the options price page from the WSJ or IBD is around somewhere. 
Steve Waite
For those intimiated by a 900 page tome, I recommend Mark Wolfinger’s book, “The Short Book on Options. It’s well written and only 100 pages.