Options trading is a great way to generate income as an individual investor. But it can be confusing and complicated for beginners, because of the many options strategies which traders can employ. This article shares the best options trading books for beginners that will help you understand options trading and how it works, including introductory strategies.
The Rookie’s Guide to Options: The Beginner’s Handbook of Trading Equity Options by Mark D. Wolfinger
The Rookie’s Guide to Options is a practical book that explains the basics of options trading. It teaches you how to manage risk and use options to enhance your portfolio, generate income, or make speculative bets. The book also explains how to use options for specific investment strategies such as hedging and leverage.
If you’re looking for a clear introduction to the world of options trading, this book is a great place to start. Mark D. Wolfinger is an experienced market maker and professional options trader who knows firsthand what kind of questions new traders typically have about the subject matter. His writing style makes it easy for readers without much experience in finance or economics (or even those who have never traded before) to get up-to-speed on the topic quickly with no confusion!
Trading Options For Dummies by Joe Duarte
In this book Trading Options for Dummies, you will learn about the basics of options trading and how you can manage risk. It also gives a brief overview of what options are and how they work. You will find out how to trade options on stocks, exchange-traded funds (ETFs), and indexes, as well as how to reduce your risk when trading them.
The author includes many examples that walk you through various scenarios with step by step instructions so that you have a better understanding of the material presented in each chapter.
Option Volatility & Pricing: Advanced Trading Strategies and Techniques by Sheldon Natenberg
This book is written by Sheldon Natenberg, who is considered a top expert in options trading. He has over 30 years of experience and he has been published in several financial magazines such as Forbes, Barron’s and the Wall Street Journal.
The book covers lots of topics related to option trading. It starts with basic concepts that you need to understand before getting started with options trading such as understanding the basics of options pricing, reasons why traders use options instead of stocks or futures contracts, etc. After that it moves on to advanced strategies like ratio spreads, calendar spreads etc., which can help you make money even when market conditions are not ideal.
In my opinion this is a great book for beginners because it explains things clearly and gives plenty of examples so that anyone can understand them easily. However I think it might not be suitable for experienced traders since there isn’t much new information here compared with other books mentioned above (although personally I still found some good stuff).
Everything You Need to Know About Completing Your First Options Trade by Lee Finberg
Options are known as a powerful tool for hedging and speculation, but they can also be very risky if you don’t know what you’re doing. The first thing to understand is that options allow you to buy stocks at a specific price while avoiding the cost of owning them outright. If the stock price goes up, then your option would increase in value and can be sold for profit — if it doesn’t work out, no harm done because you didn’t own anything!
If your goal is only to make money then I would recommend buying stocks or selling puts instead of writing calls (which will take time). Writing “covered call” options means that you have bought shares of stock at their current price and simultaneously sell an OTM call option (with low strike) against those shares such that if shares go up by more than 2% above their original cost within 3 months from now (time frame varies depending on broker), someone else could buy those shares from us at higher rate than we paid for them originally – thus making us lose money since we won’t get anymore premiums than this unless our stock rises above its initial level by more than 2%.
Get started investing in options with these great books.
If you are interested in investing but want to learn more about options first, these books can be a good place to start. They provide an overview of the history of options and explain the different types of options and their risks. These books will help you get started investing in options with confidence!