5 comments about New Insights on Covered Call Writing: The Powerful Technique That Enhances Return and Lowers Risk in Stock Investing.

1. This book was recommended on CNBC's Options Action show in response to a viewers e-mail. I own countless books on options trading but nothing I have comes close to the information found in this text. Natenberg completely covers all the mechanics of options, valuations, proper use of, and trading strategies to name just a few of the topics covered. He definitely goes far beyond what you will find in most books on the subject.



2. Very clearly written and explained.
   
   Though english is not my mother language, I managed to understand everything that was in the book.
   
   A must for every trader who already has basic understanding of options and covered calls and wishes to expand his knowledge and discover new trading tactics and methods.



3. After reading this book, I am left with the question of "why". Why should I write covered calls? By the author's own analysis, the covered call strategy proves hardly any better than a buy-hold strategy. The claim is that it is less risky than a strict buy-hold strategy. While that may be true, as others note, it seemingly would require an awful lot of effort to execute and result in a great deal of complexity, particularly in a taxable account. For me, it is more than I would want to take on given that expected return appears quite similar.
   
   Additionally, I think the risk mitigation of the CC strategy is out of proportion to the potential loss in upside potential. And practically speaking, the strategy seems to be one of being forced to sell "winners" while keeping losers. To me, that does not seem to be a winning strategy.
   
   Additionally, if one is trying to mitigate risk, why would one not simply hold fewer shares in a long position (investing the difference in a CD for instance, with a guaranteed return)? Sure, the "premium" might be less, but the downside risk would be much lower and the upside potential much higher. In proving out this concept to myself I built a simple spreadsheet model using the Pfizer example from p. 24 of the book (stock at $42.50 and $45 calls paying a $0.55 premium). Plug 1000 shares into the CC and BH parts of the model and the CC strategy looks pretty good based on gains and losses ranging from -100% to +~10%. But plug in 1000 CC and 750 shares BH and all of a sudden the CC strategy looks terrible on the downside and upside outside a very narrow range (+/- ~5% or so). So it seems that covered calls would make sense if the stock price is not very volatile and the "premium" payment is pretty high relative to the stock price. Otherwise, if the stock has much volatility or if the premium is low relative to the share price, buy and hold (with fewer shares and the difference invested in a principle protected asset) seems to make more sense.
   
   I'm sure there are folks who know a lot more about the CC strategy than I who will argue convincingly against my comments or demonstrate that my simple analysis is wrong - and they may very well be right. But this is a review about the book and in my opinion, the book did not illuminate on these points. Instead, it communicated a strategy of apparently very limited benefit, relatively high complexity, and one that runs counter to the idea of keeping winners and getting rid of losers in one's portfolio. I would like to be convinced otherwise, but a strategy like this (as I understand it) is really not what I'm looking for.



4. The author, who obviously has an enormous amount of experience in the field of put and call options, has put together a well organized book, with easily accessible information for the novice investor. Money well spent.



5. As a professional trader I am horrified when I hear "gurus" recommend cover call write as a way to protect one's portfolio. If I wrote a book on how you can make millions selling naked puts I'd be hung out to dry, however a covered call and naked put have IDENTICAL profit/loss graphs! Graph it out and you'll see. If you are willing to sell a naked put in a stock, then and only then, should you feel comfortable selling covered calls in one.

5 comments about Paul Wilmott on Quantitative Finance 3 Volume Set (2nd Edition).

1. Wilmott certainly is not a mainstream guy and so his boks aren't mainstream either. As some topics (e.g. portfolio theory) are dealt with in a rather shallow fashion, this is not the most brilliant book on quant finance conceivable. But as Wilmott takes a no-nonsense, practical perspective it is by far the best textbook on (equity) derivatives and a great reference. Best of all: It is fun to read...



2. After Fin. Engineering with math major still found the book very useful. Easy understanding, skipping tedious proofs to prevent sidetrack readers from the core of subjects.
   
   What I enjoy most of the book is the VBA programming, not all the sourcecodes are mentioned in the book, but readers should figure out the reason behind. Very worth to keep one at your office.



3. Wilmott compendium is nothing more but a summary of all the other books that he managed to publish thus far. This, however, is not the problem. The real problem is that his books continue to lack depth and applicability. None of the chapters will help you to solve real problems nor will it give you guidance of how to implement the models (which some few exceptions). If you are looking to buy a real comprehensive compendium on quantitative finance, which is full of state-of-the-arte examples, problems (problems that really count) and explanations go for the new Carol Alexander books on quantitative finance (part I-IV). She has set the industry standards.



4. This book was a big disappointment for three reasons: 1) it doesn't have a proper focus. Author wanted to cover everything and that's why the book is making sloppy impression, i.e. too wide and not too deep when it is necessary; 2) it doesn't help you as a quant in the everyday quant life. It doesn't show you how to backtest models, it doesn't tell you how to use all this knowledge in the practical way, it doesn't even tell about the robustness and out of sample testing; 3) it is an arbitrary collection of known theories with some unexplained extracts from the different fields which are not connected with each other in the logical way.
   
   As the final accord: why the "quant bible" is based on the "normal" distribution. How long are we going to use all this useless in practice old concepts like Black-Scholes models etc?



5. Just an encyclopedia, however the author's way of telling the things and his extra comments make the reading of the book a very pleasant occupation.

No comments about Fourier Transform Methods in Finance (The Wiley Finance Series).

5 comments about Trader Vic II: Principles of Professional Speculation (Wiley Trading).

1. This is a great book and should be read to the very end. Usually when an author puts out a first book that is great the 2nd book falls short. This the second book is every bit as good as the first book. Thanks Vic - I hope to one day have the pleasure of meeting you in person.



2. My husband bought this for the stock market tips. This was back before the recession when the stock market was still doing ok.



3. First, there was Jesse Livermore. Next, there was Nicolas Darvas. And, there was William O'Neil. Then, alas, here he is. Victor Sperandeo! The tradition continues.



4. I found the book to be very informative in both the fundamental and technical aspects of stock speculation. The book has plenty of historical and statistical data for the stock markets that some may find useful.



5. Mr. Sperandeo's books belong to the classics of trading literature, and yet or perhaps of this, they are not as widely known as they deserve to. They combine a superb research, common sense, and straightforward approach to trading that are far from ubiquitous in the literature that more and more frequently revolves about esoteric nonsense, hype, and self-promotion. Not so in these books, written by a master trader and fund manager with outstanding credentials. Anyone aspiring to successful trading should give these books more than a cursory consideration. There is something for everyone in his books, from beginners to advanced aficionados of trading, so nobody will feel disappointed. Their scope is broader than in many other books on trading, which certainly reflects author's great erudition. His gentle style and numerous personal stories from his trading career guarantee that the books are a pleasure to read. These are books that you may want to revisit time and again to learn more or to get a new perspective on things. There is some overlap between Vic I and Vic II, but definitely not great enough to dismiss Vic II as a rehash of Vic I. I recommend both of them highly to all of my clients and to everyone interested in intelligent, particularly long-term, speculation in the financial markets.

2 comments about Merger Arbitrage: How to Profit from Event-Driven Arbitrage (Wiley Finance).

1. I just finished reading the Merger Arbitrage book by Thomas Kirchner and I really enjoyed it. Mr. Krichner's book broke down the philosophy and process behind investing in mergers in a simple and concise way so that anyone can understand how merger arbitrage works. The book has detailed examples of past mergers which really help to illustrate how mergers operate and how to take advantage of them. The book also talks about risks involved with mergers and explains how some risks really aren't that bad considering the potential up side for merger arbitrage strategies.
   
   My favorite part of the book was chapter 12 which talked about how merger arbitrage strategies complement traditional investment strategies. Mr. Kirchner pointed out simple benefits such as diversification of risk and return streams as basic reasons to incorporate a merger arbitrage strategy into traditional investment strategies and he backs up his claims with data that shows exactly what he is talking about.
   
   Overall I would recommend this book to any person who wants to learn more about investing. The book caters to any level of investor and it has great examples which really help out!



2. Merger Arbitrage is informative and engaging and if you like finance and investing you will love this book, even if you haven't spent more than five minutes in your life thinking about mergers & acquisitions. A more descriptive title might have been 99 Mergers because that's essentially what the book is, the definitive collection of mergers and what we can learn from each one.
   
   There are hostile takeovers, management buyouts, bidding wars, busted mergers, spinoffs, proxy wars, insider scams, activist shareholders, private equity kings, anti-trust suits, appraisal actions, and a few other situations that you've never thought of but should know about because let's face it, anything can and does happen in the financial markets.
   
   It is a fun and informative read and Kirchner includes enough statistics to let us see the big picture, for example what mergers are more likely to succeed and why, both for firms and investors. It is also pro-shareholder and pro-investor and rightfully skeptical about both Wall Street (including private equity) and management. I still have one chapter to go in the book but am already recommending it to my friends and colleagues who have an interest in the markets.

5 comments about Trading Risk: Enhanced Profitability through Risk Control.

1. The current market condition, where virtually no asset class has been spared the bloodbath, is a sober realization for many of us in the investing public on the importance of proper risk management and discipline in investing. In that light this book is a perfect reminder for all of us why risk management is integral part of wealth growth. Normally the media talks about opportunities in the market place and seldom the risks involved. While amateurs look at the opportunities in the market place, the professionals look at the risks ( to rewards) and take appropriate action to mitigate or eliminate the risks. The book does a very good job of explaining why the 1987 equity market crash happened, it then gives us some insights into portfolio insurance business which was initially considered a great innovation but turned out to be one of the key factors behind the crash and the subsequent massive wealth destruction!
   Seems like we never learn, something similar is playing out in the current credit crises of the financial markets. Initially Mortgage Backed Securities and CDOs( Collateralized Debt Obligations) were hailed as the biggest financial innovation of modern times, but now the over engineered financial products are being blamed for trillions of dollars of investors wealth being lost ( Warren Buffet Keeps calling it the Pearl Harbor of financial markets). This goes on to prove that finance is an ever changing field and what worked in the past may not work in the future or may actually have the opposite effect. What can an investor do in such an ever changing landscape? The answer is risk management and this book has some practical suggestions around it. The book talks about discipline as in ..only this time I am bending the rule and over leveraging my investments or adding to a losing position..never again, the author reminds us to never make an exception when it comes to risk management. Actually he tell us that spending money on risk should not be considered an expense, it should be actually considered an investment. An investment which protects us from losses and lets us sleep well in the night. A highly recommended read for all who are interested in making money in the market, the safe way!



2. I think this book covers the topic of risk adequately. I got it last year and finally got around to reading it this week. If I had to buy it today I would probably pass, at $55 its twice what I paid for it in November. Someone must really like it?
   
   I read this book to further refine my risk strategies. What I found was a book that explained risk in detail, but did not seem to offer me much in the way of finetuning my system. Although it did give me more confidence in my system and confirmed to myself that I am on the right road.
   
   I liked the story of one risk manager from the book. This person had pages and pages of complex mathematical formulas to arrive at his funds risk levels. But if you turned over the page it said "equals five percent". LOL. So my 5% risk strategy has been correct all this time and I didn't have to use a Cray supercomputer to arrive at that number!
   
   If you are new to risk assesment or need to figure out complex hedging risk strategies this is a good book. If you have a pretty good understanding of risk already, you may want to pass on this book.



3. I suppose if I had read this when I started to trade 14 years ago, it would have helped me. If you've traded for more than four years, you should already know most of the things covered in this book or you are an ex-trader. The book is mostly targetted towards money managers which is somewhat different from what I do which is proprietary trading in fixed income. The book will help you understand to risk less when you are down and risk more when you are up. Nothing earth shattering. I personally liked "Fortune's Formula" a lot better although the subject matter differs. Overall a good solid book for a novice trader.



4. If you are looking for a book whith detailed risk management techniques this is not your book. This book is oriented to money managers that are currently aplying risk control and want to read some stories about that. There is no practical information that allows the reader to implement a real risk control mechanism. Just ideas like "keep your volatility below 10% of your trading capital" or "make a correlation analysis of your P/L with everything to see if you find something". Too much stuff to say "be prudent"
   
   If you want to understand the mathematics of money management, risk control and position sizing you'd better read RALPH VINCE. I suspect that those that are publicy dissapointed with optimal f do not understand the issue very well. In "the new money management" by Vince you have a clear procedure to obtain the maximum profit from your money with the risk level you are comfortable with. (dynamic fractional f).
   
   If you (like me) are looking for new ways to get the best for your money, with examples and practical demostration of the statements so you understand every single line do not buy this book. I does not provide that.



5. Perhaps some reviewers might disagree but to me this is just an intermediate to advanced level trading book that focuses primarily on risk management with decent coverage of systematic risk management strategies or tools (say, correlation analysis on P/L vs holding period, VAR, number of positions, exposure level etc etc) plus many vividly written stories of traders anonymous that help traders of all levels to sharpen their edge.
   
   To those traders who are willing to go and work the extra mile for better defense in the trading battlefield, it can really help, for sure. In other words, those who are already preparing their own daily trading journals or have somebody else to complete the job will definitely benefit from the advice of this book. However, if you wont bother to do even the minimal daily book keeping job, not to say those relatively complicated analysis made easy by software readily available in the market, please give this book a pass.

5 comments about Volatility and Correlation: The Perfect Hedger and the Fox (Wiley Finance).

1. I have read this text from cover to cover twice. It is much easier to understand its organization the second time around. The reviewer who complained that it feels disjointed perhaps simply didn't connect with the key messages running through the book. Having assumed (incorrectly) that the intro chapters were a bunch of fluff typical of these texts, I glossed over the intro the first time around. You'll benefit greatly if you scan the book, then go re-read the intro. It's all there put together painstakingly by an author who must have spent an inordinate amount of care and effort trying to make his points clear.
   
   Another reviewer complains that it's verbose. Perhaps, but Rebonato really drives his points home by explaining the same thing from multiple angles and repeats himself at just the right points to keep you on the right track. I can see how somebody impatient can get annoyed by it, but if you are willing to invest time and read his prose - especially the intro chapters - carefully, the insight gained is definitely worth it. Not verbose at all in my view. Every paragraph has a purpose if you understand what he's trying to communicate.
   
   It's an advanced text. Don't waste your time if you just learned what a call option it. There are more relevant texts for you out there. You should also have covered basics of stochastic calculus (see Neftci for one). For somebody who has traded vol and wanted to go deeper this book is pure gold. I love it as much as I love Taleb's Dynamic Hedging, albeit Taleb is much less formal and rigorous. What's common betw the two is the depth of original insight relevant to a trader not typically found in the sea of literature on derivs.



2. If you are really into exotics, then this book will provide a lot. It is the most extensive book that I know and it is written by a trader for traders. It has some serious weaknesses though: its structure is somewhat chaotic and it seems as if the chapters have just been pasted together from different sources. On top of that, it is somewhat lengthy.
   
   If you want to trade exotics, you have to read it anyway...



3. This is an extra-ordinary book by one of the best in the field. Very unique perspective on theory and practice of pricing and hedging. Wish it was bit less verbose though.



4. There are many books on financial modeling currently available and each has a different approach to presenting the subject matter. Some endeavor to present rigorous mathematical formalism and real-world practical examples are kept to a minimum or are completely absent. Others, and there are many of these, only sketch the mathematical details and present many (usually trivial) examples using software tools such as EXCEL or SAS. Then there are those books that attempt to explain in detail the intuition and meaning behind the concepts used in financial modeling, and never tire at giving readers the insight they need in order to become successful financial analysts/modelers. For reasons unknown, these books are rare, but when one comes across them they definitely stand apart from the others in terms of their high didactic quality. Reading these books is sheer pleasure, and no matter how high they are priced their readers are still getting a bargain.
   
   This book is one of these, and readers who want a sound treatment of the mathematical theory of options along with insightful motivations behind this theory should reserve some time to study it. And it is a book that should be read not only by those who want to enter into the field of financial engineering, but also by seasoned professionals who need this kind of insight, if only to be able to better explain the underlying concepts to administrators and managers. It could also be very useful to instructors in the many financial engineering departments throughout the world. Hundreds of millions of dollars are devoted to financial modeling at the present time, and this is only likely to increase in the years to come, despite the pronouncements of some who are skeptical as to its value, pointing to the current strains in the credit markets as proof of its inefficacy.
   
   Some examples of the clarity and insight that the author brings to his writing include the following:
   * The discussion of the notion of a risk-neutral measure and the resulting Girsanov's theorem. This is a topic that is usually treated cavalierly in most books on financial modeling, but in this one the author motivates it in the context of the replication of option payoff. The side constraint `the absence of arbitrage' guarantees a unique price for option, and the author begins his motivation by considering the familiar approach via partial differential equations. But after this discussion he believes that arriving at and understanding Girsanov's theorem is best done outside of the continuous time framework, due to the latter's complexity. His ensuing discussion, done in the binomial approximation, proves its didactic power, for the author outlines four different approaches to the evaluation of the fair price of a contingent claim. The fourth one on risk-neutral valuation is the key to his explanation of Girsanov's theorem. Along the way, the Radon-Nikodym derivative appears, and in a way that is much more understandable than merely stating it as a definition, as it typically the case in books on real analysis. In this book it appears when one considers "switching numeraires" and the author does a beautiful job in explaining how this is connected with the equivalence of measures and Girsanov's theorem.
   * More precise definitions of terms typically used in discussions on option pricing and general financial engineering and why this precision is necessary when engaging in financial modeling.
   * The discussion on the difference between hedging with spot transactions in equity forward contracts versus interest-rate forward contracts. This discussion is generalized from forward contracts to options on equity or FX forwards, and gives insight into the difference between the "Black" world and the "Black-Scholes" world and the complexity of hedging with interest-rate derivatives.
   * Detailed discussion and insights into the efficacy of hedging, in both the "real" and "risk-adjusted" contexts.
   * The discussion on the Crouhy-Galai argument as to the need for including both the total variance and the instantaneous volatility in obtaining an optimal hedge.
   
   Note: This review is based on a reading of four chapters of the book.



5. Although the author warns the reader in the Preface, that because he ran out of pages (come on it is more than 800!) he omited dealing with Copulas, it is still a pitty that a book about correlation does not present at least a small chapter on this new (state-of-the-art) area.
   Everything else is very good, solid material with a good balance between maths surrounding the topic, explanations and worked out examples.

5 comments about The Complete Option Player.

1. This is a great book. I was losing money with options until I did what was outlined in this book. I would recommend it to anybody.



2. I bought a 13-week subscription to his newsletter after reading this book; the book is pretty good [although they leave a lot of information out--I would like more information on how the "Option Trading Box" works. I thought this would be in the e-mail newsletter or on his Website--it's NOT].
   
   The part that bothers me about his Website newsletter: his exit points--which he says are so important in the book--are nonexistent on the Website. It's not very well presented, and I would give his newsletter a 1: pretty risky, low returns.
   
   I think I also do better trading on my own than I would with his help from looking at his current issue and archives. I papertraded a couple of his trades, and they're not doing all that well. STICK WITH THE MOTLEY FOOL!! At least they prorate your subscription if you don't like it!
   
   There are NO refunds for the newsletter.



3. Good solid information about options trading. It is indeed 'Complete'. I am annoyed, however, that this 'revised and updated' edition persists in using antiquated fractional notation in the charts and text. Thus throughout the book you see prices listed as 4-7/8 or 10-1/4. Converting this book to decimals would have forced Mr. Trester to use modern examples, instead of those from the 1970's and that would have also benefited this fine work. The option tables in the back of the book at least are in decimal form and should prove quite useful.



4. For an education in options this book is a double-edged sword. You will learn far more than you ever may have thought there was to options but, if you aren't careful, you can break your brain on the information.
   
   My greatest reason for speaking in favor of Trester is simply this: he takes some of the long upheld principles of sound stock investment and translates them to options investing. That alone gives the book value. In addition, he shows you how it is possible, using options, to generate a regular income instead of simply buying stock and generating income when it goes up, though that is not necessarily a bad idea. Until I read this book, I would have only thought that possible with a business or real estate. I was wrong and I'm grateful.
   
   Having said that, the shortcomings of the book are equally revealing. The comprehensiveness of the book actually works against it. While it was very enlightening to learn about futures contracts and their related options, it was not long before I ended up skipping all those chapters because Trester (rightly) warns of this as soemthing only much further down the line. Thus anything beyond a brief introduction (and the book goes WAY beyond it) to this area is a waste of pages.
   
   Furthermore, I was disappointed by the scarcity, almost complete lack, of number work. Trester instead recommended using the included charts, using a piece of software (namely HIS software), or subscribe to his newsletter (he has another one that may or may not have replaced the one named in his book). While it's understandable that Trester would not advocate gathering the data and working the formulas manually when there are dozens of programs to do the work for you, by barely discussing those formulas he comes across as advising the reader to skip the education, let the work be done for you and accept the results of the workhorse. To that, I can only say two words: technical foul.
   
   In fairness, some of those numbers DO just have to be accepted in the end (like the fair value of a given option) because it is nothing more than a matter of time and statistics, and generating those numbers for yourself is reinventing the wheel. That however is the exception and not the rule.
   
   In conclusion, if you want an eye-opening first book to introduce you to options, I can honestly recommend this one. If you want a single definitive reference to use for the rest of your options trading career, either keep your money altogether, or be ready to pony up again for a book to supplement this one.



5. If you are a fan of Lawrence McMillian and love to thread through pages of frivolous information, you probably won't enjoy this book.

   The Complete Option Player is 46 chapters and 500 pages of powerful information. Once you begin reading, you won't want to put this book down.

   You will find insider secrets and other advice that you will not find anywhere else.

   Chapter 38 - Option pricing is probably the most important chapter in the book, especially for new traders. Trester also includes call and put option tables to assist the investor.

   Overall, a very good book and a great supplement to Wall Street Money Machine #1 and #2. I would also recommend Wall Street Money Machine #4, which is all about option trading in addition to this book.

5 comments about Options Trading 101: From Theory to Application.

1. Mark LaMoure, Boise, ID
   
   "Option Trading 101" is Bill Johnson's flagship stock options book. Its a wonderful text for learning stock option strategies. A Four Star Rated book, Johnson writes about stock options and how they limit risk while multiplying your profits. He delivers a user friendly approach for Basic to Advanced options. Comprised of 10 Chapters and 449 pages, the book is well rated. The book is a winner, covering critically important option topics for your best interest. Copyright 2007.
   
   BOOK HITS THE TARGET
   Bill writes in an easy to understand manner. Its a high quality book, with Chapter Review Quizzes at the end of each Chapter confirming you understand it. Johnson uses redundancy to support what he discusses for better comprehension. His use of analogies guarantee to help you understand the concepts in options. I enjoyed reading the book. But in some areas, the book is affected by bad editorial proof-reading and needs a 2nd edition to correct such mistakes.
   
   "Option Trading 101" is a full-blown options education in one book. Johnson wrote a comprehensive book, covering A-to-Z the most important topics in option trading. As a great book, it clarify's and simplify's investing topics most other books don't even touch.
   
   IMPORTANCE
   The book is an excellent, basic introduction to options. It is useful and you can use it as an important tool for future reference. Johnson discusses the fundamentals of option trading lucidly in a simple and concise manner. A four star rated book, Bill leads readers through the most important subjects in option trading with ease. This book is smooth and articulate and one you'll enjoy.
   
   If you liked this review, please click YES. Thank You.



2. For anyone who is trading options that has not had a formal training, and for anyone wanting to start trading, this book is a must. It is a good teaching book with chapter questions (and answers) that is simple to read, easy to understand and which gives an excellent overview of the whole options structure, relationships between the various "Greeks" and the option/stock price. In the later chapters there are explanations and examples of various trading combinations such as vertical spreads.



3. I discovered Bill Johnson through his user friendly web site www.optionsatoz.com, and his free webinar, Nite Owls. Bill has a great knowledge and compassion about options which he shares with his students and readers. Bill's book "Options Trading 101" is world class. Bill has a knack of writing this book to make it an easy to read and understand.
   
   Robert Williams, Ph.D.



4. I could not put this book down. The text is very accessible and makes for quick reading. It contains a mountain of information that will serve any option (or stock) trader quite well.
   
   This isn't an "options playbook" or list of strategies, though it provides some. More importantly, this is a book that answers a lot of fundamental questions about how options are priced, why there isn't any free money (good coverage of arbitrage and the function of market makers,) volatility, synthetic options, leverage, the meaning and usage of some of the more common metrics and indicators available when looking at options chains, and then covering the mechanics of working with options and how rights/obligations are dealt with and how these processes translate to orders given to your broker.
   
   With this information, you are well-armed to learn pretty much any specific strategy from a playbook, and will have the requisite know-how to pick up and understand all those other strategies with very little effort. The chapter key-points, quizzes and then answers are an excellent way to spot-check your comprehension.
   
   Mostly it's done very well.. HOWEVER, the quizzes/answers were poorly proof-read by quality control. There are several instances of blatantly incorrect answers provided (because the answer wasn't for the question posed) or in one case, the answer section restated the question rather than answering it! There were a few instances where the options chain image didn't match the values being discussed in the text.
   
   The mistakes in the Q&A self-review sometimes end up costing the reader extra time in re-reading the question, answer, and previous chapter's text/graphs. There is a seed of doubt in later readings where you wonder if you've encountered another editorial error, or if you have a genuine misunderstanding of the material. It's quite undesirable when you're new to the material. Thankfully in most cases, the correct answer is discernible quickly, but I feel these mistakes should have been caught before publication, and feel OptionsUniversity or MorganJames needs to put out an errata document for the first edition and consider releasing a second edition.
   
   In spite of this, the actual number of errors isn't terrible. Because the book is highly accessible and easy to read, and a very enlightening primer that I would without hesitation recommend to a friend (of course telling them in advance there are a few minor errors with graphs not matching text or mistakes in later self-reviews.)
   
   Really wanted to give this one 5 stars, but knocked it to 4 due to editing errors.



5. This book had so many errors and blatant contradictions it was more confusing than the genealogy of Jesus. It will have your head spinning so fast some may mistake you for Linda Blair! The author blitzes the reader with math and details the understanding of which simply is unnecessary in order to trade options and could easily intimidate someone new to trading. The excessive errors found throughout the text are inexcusable, especially for a technical book. When practical applications are finally covered in the final third of the book, we aren't presented with anything really interesting. The Iron Condor strategy is mentioned once earlier but is quickly dismissed in a condescending manner as if someone who could thread through all that math wouldn't easily pick up that relatively simple concept! If you are new to trading and don't want to be more confused after you read this book than before you picked it up, this one should be avoided.

5 comments about The Evaluation and Optimization of Trading Strategies (Wiley Trading).

1. Excellent detailed book. Really lays out the process in an understandable way yet is loaded with the techno-speak to see how it all works. Used it a lot in designing a strategy. The importance of avoiding curve-fitting and over-optimizing was made very clear. Happened to have consulted with one of the people on the back jacket that praised the book before we even discovered this book. THAT really gave us confidence that the book would help and it did. Our system is through the moon!



2. You would be better off watching the free trading videos on Trade Station to learn about creating trading systems and optimization. This book seems to be one long commercial for Pardos Group forward testing software which is no longer available. The book is basically useless since the premise is that in order to test a trading strategy you must first test it in out of sample data. This makes perfect sense but you need software and a data feed to do this otherwise time consuming testing.
   The software recommended of coerce is Pardos group which they no longer sell.



3. the book is very intersting, maybe sometimes it appears too long regarding the content but it is OK



4. This book is precisely written and gives a great educational foundation on the concepts of trading system analysis and proper optimization. TradeStation, TradersStudio and the other testing platforms are tremendous tools and can be used to develop robust trading systems but at the same time they can be quite dangerous to the novice trader. With the computational power and data that it available today, a new system developer can easily get carried away and over curve fit their trading scheme. Bob tells how not to do this. The book also covers the most important performance metrics and how they should be used to determine the robustness of a trading plan. Also Bob has worked with Bill Dunn for many years and this is definitely an indicator that Bob knows what he is writing about. If you are interested in developing robust trading systems or analyzing one to purchase, you can't go wrong buying EOTS.



5. I use Tradestation for my day trading and thought I might learn something new from this book to help me better optimize my strategy ideas. Maybe my expectations were too high. The book is a basic concepts book about strategy optimization with nothing revolutionary (in my opinion). If you are new to Tradestation and are curious about Walk Forward Analysis or Optimization, just Google it... I really need to screen the books I am considering buying more at the bookstores before I buy them. grrrr