In my capacity as a trainer and coach for OptionsPlayers, I am often asked for book recommendations. While I always respond by telling students that the best resources are the experienced "starred" traders on the OptionsPlayers chat and forums, there are some great resources and books that I continue to rely on.
TomsOptionTools. When I first started trading options, I made money, lost most of my profits, and enrolled in a training program that relied on an Options Analysis tool called Platinum. TomsOptionTools, its successor, is by far the most powerful tool in my arsenal and you will see me posting many screen shots going forward. It is highly recommended.
"Options Trading for Dummies," by Joe Duarte
This is the first book I bought when embarking on my 10 year trading journey. It's basic, but gives you just enough to be dangerous. It starts you at the beginning, explaining the common types of options available for trading and helps you choose the right ones for your investing needs. You'll find out how to weigh option costs and benefits, combine options to reduce risk, build a strategy that allows you to gain no matter the market.
"Technical Analysis for Dummies," by Barbara Rockefeller
If you have Options Trading for Dummies, this is a great complement. Technical analysis is a collection of techniques designed to help you make trading decisions. Technical Analysis For Dummies helps you take a hard-headed look at what securities prices are actually doing rather than what economists or analysts say they should be doing, giving you the know-how to use that data to decide whether to buy or sell individual securities.
"Options as a Strategic Investment," by Lawrence McMillan
Considered by many to be the Bible of options trading, Lawrence McMillan’s classic from 1980, “Options as a Strategic Investment,” provides traders with practical option trading strategies designed to minimize risk and maximize the profit potential for an investment portfolio. This book is over 1,000 pages. I consider it a reference reference on trading options. It contains information on the concept of using options, specific option strategies and market conditions in which they tend to work best, obtaining the best possible risk/reward position for an investment portfolio, using options as a hedge, and how U.S. tax laws apply to option trading profits or losses.
"Option Volatility and Pricing," by Sheldon Natenberg
For me, understanding market volatility and its relation to option pricing is vital to helping traders conceptualize option pricing and evaluate fair value in the options market. “Option Volatility and Pricing” is considered one of the best volumes on this subject. It provides a clear, solid explanation of theoretical option pricing models, followed by instruction in specific trading strategies that have historically been the most profitable in various market conditions.
"Mechanical Trading Systems: Pairing Trader Psychology with Technical Analysis," by Richard L. Weissman
Weissman's book has been on my shelf for many years. Books tend to be the first thing to go during spring cleaning or when I have transferred to a different post. This one alway gets moved. Mechanical Trading Systems examines the development process for choosing and using mechanical trading systems in conjunction with trader psychology. This book discusses the advantages and disadvantages of mechanical trading systems; the dangers in system development and how to avoid them; the optimal methods for back-testing trading systems; position sizing and other risk quantification tools; and methods of improving rates of return on investments without significantly increasing risk. Most importantly, through a detailed examination of various types of unsuccessful trader personality traits (e.g., fearfulness, greed, and impatience), the book recommends different types of trading systems for a diverse array of trader types.
"Japanese Candlestick Charting Techniques, Second Edition" by Steve Nison
I’m a history buff. This book is a great compilation of past studies of the East on the demand and supply forces of the market. The author goes into combining it with western charting methodologies in the second half of the book. The book is easy to read with a touch on the foundation of candlestick techniques. Highly recommend to anyone studying the demand and supply forces of the market.