Jan 16, 2024
Options trading, a facet of financial markets that melds strategy, risk, and potential reward, is a discipline that demands both theoretical knowledge and practical acumen. As a dynamic and complex field, it offers an exciting opportunity for traders who are well-prepared and informed. This blog delves into the top 10 books that every aspiring options trader, from beginners to experienced market players, should explore. These books, tailored for both the Indian and global markets, offer a wealth of knowledge on various trading strategies suitable for intraday, short-term, and long-term trading.
Books Focused on the Indian Market
"Emerging Financial Derivatives in India" by P. Majhi (2015)
Focus: Options market open interest in the NSE.
Strategy: Majhi’s work provides a deep dive into directional trading strategies based on options open interest distribution, offering invaluable insights for traders focusing on the NSE.
"Profitability of Trading Strategies on High-Frequency Data" by T. Patnaik and S. Thomas (2004)
Focus: Contrarian and momentum trading strategies in Indian equity markets.
Strategy: The authors present an analysis of momentum strategies, particularly effective in the short run, offering a fresh perspective on Indian equity markets.
"Strangle to Resuscitate: Evidence from India" by P. Bangur (2019)
Focus: Long and short strangle strategies on Nifty.
Strategy: Bangur’s research into short strangle strategies reveals a high success rate and profitability, making it a must-read for Nifty traders.
"Option Hedging with Smooth Market Impact" by R. Almgren and T. Li (2016)
Focus: Intraday hedging of an option position for a large trader.
Strategy: This paper offers a nuanced view of optimal hedging, considering market impact and liquidity, a real-world application far beyond traditional models.
"Angled Short Straddle: A New Dimension of Trading" by P. Bangur et al. (2020)
Focus: A novel option strategy compared with the short straddle on the Nifty.
Strategy: The angled short straddle, as introduced by Bangur and team, showcases a higher success rate and profitability compared to the traditional short straddle.
Books Focused on the Global Market
"151 Trading Strategies" by Z. Kakushadze and J. A. Serur (2018)
Focus: A comprehensive guide to over 150 trading strategies.
Strategy: This book is a treasure trove for those seeking to explore a broad spectrum of options strategies in various asset classes.
"An Introduction to Derivatives and Risk Management" by Don M. Chance (2001)
Focus: A thorough introduction to derivative securities and risk management.
Strategy: Chance’s book is an excellent foundational text, covering basic to advanced strategies of options, ideal for both speculative and hedging purposes.
"The Basics of Options" by R. Tompkins (1991)
Focus: Fundamentals of option trading.
Strategy: This guidebook lays the groundwork for understanding the mechanics of options trading, including basic strategies and market operations.
"FX Options and Structured Products" by Uwe Wystup (2007)
Focus: Foreign exchange options and structured products.
Strategy: Wystup’s work elucidates various strategies involving vanilla options and exotics in foreign exchange, perfect for those interested in FX markets.
"A SIMPLE OPTIONS TRADING STRATEGY BASED ON TECHNICAL INDICATORS" by Francesco Carlier (2021)
Focus: Validity of options strategies, emphasizing weekly options.
Strategy: Carlier investigates a straightforward strategy using technical indicators, providing a pragmatic approach for those interested in technical analysis in the US market.
Conclusion
This curated list of books provides a comprehensive view of both Indian and global markets, offering readers a blend of strategic insights, practical applications, and a diverse range of methodologies. Whether you are a novice looking to get your feet wet in the options trading world or a seasoned trader aiming to refine your strategies, these books stand as invaluable resources. They serve not only as guides but also as companions on your journey through the ever-evolving landscape of options trading. As the market's dynamics shift, continuous learning remains a pivotal element of success, and these books are your gateway to mastering the art of options trading.