Options trading can be a complex topic, especially for traders who are just diving into options for the first time. The time-dependence of options can be hard to grasp for traders used to stocks. There are also dozens of popular options strategies, each with their own unique ways of managing risk.
Reading books about options trading is one of the best ways to learn how to trade options. These books cover everything from the basics of how options work to when and how to use common options strategies. Many books are written by experienced options traders and come packed with examples.
Let’s take a look at the 8 best books on options trading traders can pick up today.
Best Books on Options Trading
Best Guide for New Options Traders: Options Trading Crash Course by Frank Richmond
If you’re looking for a single book that will explain how options work, layout popular strategies, and give you the foundation you need to start trading options, Options Trading Crash Course is it. This popular book is very beginner-friendly and focuses on the key elements that traders need to know. Those include how to read options chains, how to think about strike prices, how to trade calls and puts, and how to analyze profit and loss diagrams.
Richmond sticks to the most popular trading strategies to make it as easy to get started trading as possible. This is a great read before moving on to more advanced options strategy books.
Best Advanced Options Trading Book: Option Volatility and Pricing by Sheldon Natenberg
Option Volatility and Pricing offers a deep dive into options trading strategies and the dynamics of how options prices move. In covering strategies, Natenberg not only explains how each strategy works and what makes it unique, but also when to consider different strategies. He also touches on less common options approaches, such as hedging to reduce volatility in other positions and trading options on futures.
Option Volatility and Pricing is a complex read best-suited for traders who have already dabbled in the options market and want to develop a deeper understanding of why specific strategies work the way they do. Overall, it’s one of the most comprehensive options trading books available today.
Best Options Trading Book for Beginners: Options Trading for Dummies by Joe Duarte
If you’re just getting started with options trading and don’t yet know what you don’t know, Options Trading for Dummies is a great place to start. This in-depth guide is written with stock traders and investors in mind, and it provides a very approachable introduction to the options market.
Duarte covers everything from how options can magnify your profits and risk to how to use them to minimize trading risk to how to design an options trading plan. The book delves briefly into more advanced option strategies like spreads and straddles, but these topics are mostly left to more advanced options strategy books.
Best for Long-term Investors: Options as a Strategic Investment by Lawrence G. McMillan
Options as a Strategic Investment considers the options market as a tool for long-term investors. Instead of focusing on how options can be used to generate quick profits with directional bets, this book discusses how investors can use options to manage their portfolio risk in different market conditions.
McMillan goes into detail about long-term options, known as Long Term Equity Anticipation Securities (LEAPS). He also explains how to protect your portfolio in sideways or bearish market conditions using options and how to hedge stock positions using options contracts. This is a great read for investors who want to apply the same advanced portfolio management techniques as major investment funds.
Best for Understanding Options Dynamics: Trading Option Greeks by Dan Passarelli
If you’re the type of trader who wants to understand how options are priced and how options prices change in response to volatility, Trading Option Greeks is for you.
Passarelli does an impressive job of taking one of the most complex topics in trading and breaking it down for readers. However, don’t expect to breeze through this book. It’s packed with details about option Greeks and options dynamics, and even experienced traders will find themselves going back to reference earlier chapters.
Helpfully, Passarelli also covers popular options trading strategies with a focus on options Greeks. It offers a different way of thinking about strategies and truly understanding how and when they work best.
Best for Casual Investors: The Short Book on Options by Mark D. Wolfinger
A lot of the books on this list are hundreds of pages in length and require tens of hours of careful study. Not The Short Book on Options, which clocks in at just 114 pages. It’s written for the everyday investor who’s curious about options, but isn’t necessarily going to dive headfirst into options trading.
The book provides a brief overview of key topics like how options relate to volatility, how to read options chains, and how to write covered calls for investments in your portfolio. Wolfinger skips over a lot in favor of brevity, so if you find a topic in this book that interests you, it’s important to do a deeper dive before you start trading options.
Best for Covered Call Strategies: Exit Strategies for Covered Call Writing by Alan Ellman
Covered call strategies can enable long-term investors to generate cash flows from the stocks they already hold in their portfolio. But all too often, covered call strategies are presented without much rigor – and more important, without any discussion of exit strategy.
That’s where Exit Strategies for Covered Call Writing comes in. This book zooms in on the day on which your covered call contracts will expire and explains everything that investors should be paying attention to. It offers several approaches for how to close out a covered call position as expiration approaches, plus offers real-world examples to help investors choose the best one for their situation.
Best for Professional Traders: The Option Trader’s Hedge Fund by Dennis Chen and Mark Sebastian
The Option Trader’s Hedge Fund goes beyond explanation of popular options strategy to help traders build a framework for successful options trading. It covers how to limit your risk and drawdown, how to protect against black swan events, and even how to use trade journaling to improve your success rate.
This is a great read for full-time traders. It focuses on treating options trading like a business and helps traders eliminate the large capital swings that can result from undisciplined options trading.
Conclusion: Best Books on Options Trading
Options trading books are an excellent resource for new traders looking to try options for the first time and for experienced traders who want to better understand options dynamics. They offer detailed explanations of common options strategies as well as help traders develop their own approaches to trading options.