The Options Edge: Winning the Volatility Game with Options On Futures

The major question that is answered in the book is can the option trading be profitable in the long run? Is it possible make money as an option buyer? The book is the distillation of the results of the author's major empirical investigation into option pricing carried out over a 2-year period from 1996 to 1998. Many, many theoretical works have been written (by mathematicians anxious to display an encyclopedic knowledge of the Greek alphabet) on the topic of option pricing. Virtually all theoretical works on options are needlessly complex and of limited practical use in the real world of options valuation and options trading. Much of this complexity stems from the option trading community's uncritical allegiance to the million dollar formula. This book, in the opposite, is mostly empirical. The author has directed the reader's attention to egregious instances of misleading information in the literature, especially where this information has been widely disseminated and even accepted as gospel. For all that, The Options Edge is concerned more with pragmatic issues than with theoretical arguments. The author would rather search for something of practical value than come up with another set of abstruse mathematical equations of limited applicability in the real world. There is but one Greek letter (unavoidable) in this entire book. Whereas much of what the author says applies to options in general, including stock options, the findings of The Options Edge derive from, and are specifically relevant to, options on commodity futures. The Options Edge will most likely appeal to readers with some practical experience in the trading of options. It should not be, however, your first book on options or commodity futures. Compared with other technical books on the subject, The Options Edge is rather sparing in the use of algebra and complex statistical formulae. However, the book does delve deeply into the principles of statistical inference. It also analyzes a great deal of data, but data structured in a way that anyone with an affinity for numbers should find easily digestible. The author takes it for granted that anyone interested in options is interested in numbers. Enough said, this analyzes popular misconceptions and irrational beliefs, when it comes to options on commodity futures. If you are interested in similar analysis to the market in general, I would recommend The Only Three Questions That Count by Ken Fisher.