2 comments about Making 36%: Duffer's Guide to Breaking Par in the Market Every Year, in Good Years and Bad.

1. First off, the fact that this book is linked with golf is nothing more than a marketing gimmick. Worse yet, since virtually every other page has a pithy golf-related quote or two taking up an entire page unto itself, it turns out that the golf theme simply enables the author to double the amount of pages without adding anything of substance. Substance is where this booklet really fails to deliver. The actual 36% Solution comprises less than 20% of the text while the rest of it is totally generic beginners investment advice. The booklet is little more than an ad for the author's website in which he offers various options related pay subscription services. There is no long term (by that I mean ten year or more) track record for the Solution and for a good reason. Like many option strategies that involve selling puts and calls, they work well when there is little movement in the underlying stock or index, but will likely suffer huge drawdowns or total wipeouts when there is a massive short term "black swan" type of move in the market. The book is not totally worthless and there may be a place for investing in calendar spreads as a small piece of a diversified investment portfolio. If you expect this booklet to provide you with a reliable fail-safe method of earning 36% a year in all types of market, forget it.
   
   Update July, 2008: As suggested above, the large moves of the past 8 months or so have now totally devastated the 36% portfolios outlined in this booklet with massive losses to the point where the author has now discontinued offering them in his trading program. In addition, the commissions involved were an additional huge headwind. In short, an investment disaster. Avoid at all costs for your financial health!
   
   Update December 2008: The disastrous results of the author's portfolios continues. He now comes up with new portfolios after older versions crash and burn. Each time there is a justification for why the old system failed but the new system will succeed by addressing the poor design of prior versions. The latest development that has caused the portfolios to plummet in value is the decreasing of the VIX. Okay, so last year and early this year the increase in the VIX crushed the portfolios. Modified versions didn't deal very well when the VIX stayed elevated and the latest versions crash when the VIX decreases. It seem the more things change, the more they remain the same. Steer clear!!



2. I have been trading options for years with success and failures. I have just begun with Terry's method and expect to be up considerably more than 36% on an annual basis come ten more trading days until expiration. I will add another review in several months.
   Dr. Dan D

2 comments about The Options Strategist: How to Invest and Trade Equity-Related Options.

1. This book is a little bit on the basic side, but gives a nice review of different option strategies. Nothing advanced, but still a nice summary of different strategies.



2. I've bought and sold many options using a variety of strategies. I enjoy reading as much as possible on options strategies because of the complexity of the subject. The author writes in a very clear logical sequence starting with Options 101 and then rapidly moves on to the more advanced strategies. He doesn't lose you in technical terms but keeps your interest as he walks through Options 401 (more advanced), and onto the more complex stuff. If you want to understand all of the "greek" options stuff, he explains it in an understandable format. Most options books I read get too generic and I lose interest but this book was different and I actually enjoyed it. I have 5 options books on my shelf right now and this one is the best of the group by far.

4 comments about Option Strategies: Profit-Making Techniques for Stock, Stock Index, and Commodity Options (Wiley Trading).

1. As a person who has always found option strategies to be quite confusing, this book is a god-send! Mr. Smith's book is the only options strategy book that I've ever read that gives a concise and clear decision tree on what strategy to use in what market conditions. Anyone who is a serious options trader and wants to be profitable needs this book in their library!



2. This book contains absolutely no information on how to judge whether a particular option is over- or under-priced, or how to arrive at either a bullish or bearish outlook. The idea is that you have already come to some conclusion and then you consult the book to determine how you should play the option. That would be fine if the book did not contain numerous errors, all due to the fact that this book apparently was not proof-read. For example, if your outlook is bullish, you find the strategy for putting on a call spread, and select the type of spread you want to do. The author then copied the same instructions into the section on bear spreads, and then tried to change all the "calls" to "puts" or the "buys" to "sells." Of course, he missed many such changes, and there are multiple instances where the word "call" appears where it should read "put," and where "buy" appears when it should be "sell." If you buy this book, you will have to make your own corrections in it, or you may follow the instructions right into the poorhouse. I consider the money I spent on this book to be wasted.



3. The bad news: This is a classic textbook that requires all your attention and more. Even an experienced option trader can get lost easily. The good news: It is a comprehensive guide and reference book which I use once a week to help me choose the right move.



4. Option Strategies is an excellent intermediate treatise on option trading. While it doesn't go deeply into option pricing and implied volatility, its focus on strategy and decision structure serves the reader well. Almost every major position type, from the basic buys and writes to the more complex, such as ratio spreads and butterflies are covered. Each position is dissected in detail, with emphasis on how to deal with adverse and positive price impacts.

   In the pantheon of trading tomes, Courtney Smith's work should appeal to those looking for a sound foundation in option strategy. It is one place where a trader can look at any idea and figure out which type of play offers the best risk/reward alternatives. A solid non-technical book.

5 comments about Using Options to Buy Stocks: Build Wealth With Little Risk and No Capital.

1. In his book, Dennis Eisen describes exactly one way to trade options: Selling Puts, namely LEAPS (Long-term Equity Anticipation Securities). What makes this book so interesting to read is that Eisen starts with a general overview and then goes into a level of useful detail which I have not seen in any other book on options yet. He explains how options are taxed, how the margin requirement is calculated, and what actually happens when options are exercised/assigned. This knowledge you normally have to acquire in years of practice but Eisen just spreads it out in front of the reader. Despite the level of detail the book is easy to follow, and I finished it in two days.
   What makes the author very likable is that he writes in the "I" form, i.e. he writes from his experience, and not with the claim to know the absolute truth.
   The book is divided in three main parts: Part one covers the basics, part two takes a quantitative look at the risk and reward of an actual system, and how you can improve your odds, and part three lists formulas and computer codes. There is also a big appendix with over a hundred tables of put premiums calculated with the Black-Scholes-Formula. The book is rounded off by a bibliography and Eisen's favorite web sites (some of them are outdated).
   The main reason why Eisen prefers long-term puts (and long-term meaning up to 30 months) is that they are less risky. Due to inflation and the fact that good companies increase their earnings over time thus driving their share price up, he feels that long-term options are less likely to be assigned. For this, he is willing to sacrifice quite some put premium as the following example shows: For an American Option (stock price = strike price, volatility 0.3, dividend rate 3%) the premium for a 15 months-put is $11.46 yet for the 30 months-put it is only $15.06. In other words, although the time is twice as long until expiration, the premium increases by only 31%. In proportion, the premium for a 6-months-put is even higher, at $7.71. This is because options lose most of their value in the last months before expiration.
   Here I would deviate from the author's system, I would always prefer to sell two consecutive 15-months-puts for $22.92 or even five consecutive 6-months-puts for $38.53 rather than one 30-months-put for $15.06. By rolling them out and down I would try to prevent being assigned too many stocks.
   Are there any downsides to this book? Not really. One thing I did not understand is how Eisen can put the premium which he earns into a cash market account at 6% interest rate. (This contributes an important part to the profitability of his system). In chapter 4 he explains how much margin is required: The whole put premium plus 10 or 20% of the underlying stock price. So how can he put the premium into a cash market account when he has to keep it as a margin? My online broker will give me less than 1% on my margin account.
   And one thing I would be looking forward to: Since this book was written in 2000, it could use an update. Then Eisen could test his strategy with a longer history and real data (he had to calculate backdated data because LEAPS had only been existing for seven years at the time this book was written), and update some of the web sites and bibliographic data.
   But altogether this is a great book, and it deserves five stars.



2. I really enjoyed reading this book. First, it's very condensed and well structured. The author gives a very good overview of stock options, then he explains his strategy (basically it's selling long term naked puts). Because in general selling naked options is considered to be risky, the author explains in details why his strategy is actually a low risk one. He includes the raw data he used, the programs and formulas and the results and their interpretation. The books is written from an individual investor point of view. What I really like about the book is that the author is not trying to avoid or downplay the areas of concerns. Actually he is doing exactly the opposite. He is trying to find and address the weakest points of his strategy and prove his points. Overall, it's a great book to learn about stock options, especially the LEAP puts strategy.



3. I trade equity options. I have read a lot of books about options. Basically, once you have read McMillan's book, none of the other option books have anything to add. Except this book.
   This book shows some original thinking; it's not just the same old thing about bull spreads, etc. The book advocates more than just selling puts to get premium or to use as a method of buying stock at a discount. He explains how you can sell puts on solid companies and buy stock of other companies with the premium you brought in. He really got me thinking, and I have gone from his ideas to developing some of my own.
   This book is well worth reading. Read it to get ideas on how to use puts for your own advantage. Learn something new.



4. I picked this up ... at a book clearance sale, if you have to pay more pick another title. First of all the author says he sells puts (contracts agreeing to buy a stock or index at a set price until a specific date for which you receive a premium) to buy stocks in his investment account. There is not a single example in the book of a trade he executed this way. Instead he fills about 1/4 of the book with hypothetical computer runs assuming you had sold every LEAP contract over a multi year period. That is just a silly example for the individual investor. That is akin to comparing all of the insurance coverage written by Prudential with you writing a policy on your grandma.

   Second he gives you numerous pages on how to calculate Volatility and Black-Scholes, etc. What is missed is that you want to be selling Puts and Calls when Volatility is High, and most option brokers do this calculation with a computer. As for Black-Sholes, the calculation is easy to find on the web, but any "advantage" that it may provide is used by insititutions who can rapidly scan the whole market and quickly correct any price imbalances. Unless you enjoy crunching financial formulas by hand, this section is filler at best.

   Finally, his stock selection and risk control methods are questionable at best. Think Enron and realize that even "independent" reviewers like Morningstar and Value Line had it well rated up until the bitter end. If you dont already have a solid stock picking methodology, you should not start buy selling options. The notion that a reader should do anything other than sell an option that is 100% covered by CASH is the same as endorsing the methods that bankrupted many very large traders, banks and hedge-funds.

   If you are looking for investment ideas Getting Started in Options may be a good place to START. Throw in Peter Lynch, Justin Mamis, and Andrew Tobias for good measure.




5. I saw this book in the book store, and spent some time there reading the first few chapters. I was so interested in his ideas, that I purchased the book. It's well-written and not at all dry, unlike some other investment books.

   The author starts off by telling us how he had been able to amass a decent-sized portfolio over the years. He had a couple of hundred thousand dollars saved away, all invested in good long-term stock investments. He wished there was a way he could generate more income on-top of his already solid investments.

   He started out by selling covered calls on some of his stock portfolio. That worked for a while, but he soon became frustrated that some of his best performing stocks were being called away, while he was left with a portfolio of poorly performing stocks. That is one of the down sides to covered call investing.

   So he tried selling put options instead. Selling a put option is when you promise to purchase a stock at a specific price. In exchange for this promise you get paid a premium up front.

   The author has found a lot of success picking solid companies, with sales and earnings growth, and selling put options one or two years out (LEAPs). Most of the LEAP puts he sells expires worthless, thus allowing him to keep the premium as profit, and sell some more long-term puts for more premium.

   Most of the book deals with his back-testing data for this theory. He tests different quality stocks, different expiry dates, and different strikes. All in an effort to find the best overall results. In the end, some of his data suggests that selling long term puts at a strike price below the current price on the highest quality stocks has a 95% plus success rate.

   If this type of theory interests you, I suggest getting this book and studying the theory and data for yourself.

No comments about Simple Steps to Option Trading Success.

5 comments about Trading Systems: Secrets of the Masters.

1. The book consists of a series of answers to a questionnaire sent out to many system developers, and literally a line of code devoted to the concepts presented by each interviewee. None of the ideas or answers by themselves will provide you with anything near a complete trading system, making the title misleading. In fairness, it's probably wishful thinking that one could get anything more than a lead out of any book on trading systems.
   
   On the upside, it's been over a decade since the release of the book and a few of the systems have held up and the basic logic behind the systems the interviewees have sold in the past could you on the path to a profitable system.
   
   There are a few noteworthy pieces to the puzzle and words of wisdom that someone can take away from the book:
   
   * Many use similar principles as the core of their system logic - buying higher highs
   * Most count winning % as the least important aspect to a trading system, pointing to drawdowns and number of trades as more important metrics
   * Several use SP trading systems, and although perhaps due to the date of the book, look at no less than 15 minute bars and most 45 minute bars and higher, saying there is too much noise in 1-5 minute bars
   * Many use very few parameters that can be optimized or curve fitted to past data
   * The constant refrain is the simpler the better
   * They build on the work of others and few are totally unique



2. Written in pseudo-Market Wizards style.. consists of a questionaire/interview with some of the legends of this most recent generation. There is some bias towards mechanical systems, but the information discussed is beneficial to every trader. This is one of those books that you can pick up a handful (and more) of ideas to try out for yourself.



3. This book is of no value!
   Interviews irrelevant,system ideas presented light like smoke.
   If you want to make money, instead of buying this book try to write one alike.
   Don't make the mistake I did by buying it.
   Period



4. The author was rather lazy in writing this book. He asked the "Masters" the same questions. You cannot ask the same question to people have different trading styles. The question of which futures should be retained or cancelled is really stupid. It doesn't help traders to learn something useful. Some of the "Masters" didn't answer all of them. And some answers were very confusing. I would prefer Schwager's Market wizards. This book is also overpriced. Fortunately, I borrowed it from the library. Not recommended!



5. I found Joe's book to be extremely helpful in getting into the minds of some top traders. I have found in my own trading that one good idea can be worth thousands of dollars in profits(or avoided losses for that matter). One of the easiest ways to develop success at anything that you do is to find out what the pro's are doing and then try and copy them. Joe's book sheds light on the processes the pro's use to develop trading systems and will help you on your journey to developing your own successful strategies. Get two copies, one for your library and another for the people that will inevitably ask to borrow yours.

5 comments about Secrets of the Undergroundtrader.

1. This fascinating book is well written and informative. It is specific to the day trader but contains hints for other investors. Interesting! Thanks for a stimulating read and a reminder that, as investors, we are responsible for our choices.



2. First of all, this book is for more advanced day traders in my opinion. The author makes references to indicators under the assumption that the reader knows what the writer is talking about. Jea, however, provides some day trading strategies that can prove to be profitable. I gave it three stars because I felt the author had failed to provide adequate details to support his strategies and because the sample charts were too small and almost impossible to read.



3. Rip off book. Not sure if Jea Yu is still running his daily "trading service", but this book is just another attempt to take advantage of traders who are "newbies". I would love to see the authors try and trade profitably using the strategies they themselves describe. I always find it interesting when authors show a few charts where their technique/system works flawlessly, yet fail to offer proof that the techiniques have been tested live (with broker statements) using their own money delivering the same positive results.



4. Excellent book for new and senior day traders. Jea Yu has many years of experience and he puts it all in this one masterpiece.



5. My hobby is to study the markets and I have numerous books about technical analysis and swing trading. This book consists of 362 pages of useless BS. Don't waste your money. I'm going to sell my copy, at pennies on the dollar, to the used book store.
   Hopefully, if enought dissatisfied customers do the same thing, there will be so many used copies out there that the authors can't get any royalities out of this useless book.

1 comments about Neural Network Time Series: Forecasting of Financial Markets.

1. A good introduction to neural nets and their applicability tothe futures markets. Provides mathematical/theoretical basis fortechniques involved in neural net training, testing, chaos and touches on nonlinear systems in general. Also provides interesting benchmarks of several nets against several time series. Great bibliography. Includes Fortran source code for running trained nets but not for training a net.

5 comments about Pricing Financial Instruments: The Finite Difference Method.

1. It is a very good book, well written and didactic. It covers important topics related to Financial Engineering, such as Stochastic Processes, the Pricing Equations, it also covers numerical methods such as the Finite Difference Methods. There is a topic covering the linear complementarity formulation of American Option Pricing which was able to make me understand it much better than ever before.



2. This book approximates the solution of one-factor and multi-factor PDEs that describe derivatives such as barrier options, convertible bonds, Asian options and credit derivatives.
   Standard finite difference schemes are used. In particular, 3-point centred difference schemes approximate the derivatives in the S directions while Crank-Nicolson (averaging) is used to approximate the t derivative. Stability and convergence of the schemes are proved using the Lax Equivalence theoerem. Special attention is paid to resolving the, by now well known problems associated with the Crank Nicolson method. The workarounds are choosing smaller meshes near discontinuous boundaries, coordinate transformations and choosing the right sampling points.
   The book is a good attempt (in my opinion) to show how to apply FDM in financial engineering applications. It is probably most useful for those who have already experience of FDM. It is NOT an introductory book.
   Some of the criticisms are (this is why I give it a 3 star):

   1. The von Neumann stability analyis technique is only applicable to constant coefficient, linear PDE. It is outdated, better methods being the maximum principle and viscosity solutions.

   2. The discrete set of equations need to be solved by rather esoteric matrix solvers bacause the authors discretise a PDE in all directions. Using ADI or operator splitting instead lets us solve one-dimensional problem with Tridiagonal LU Decomposition.

   3. A lot of detail on meshes has unfortunately been left out.

   4. Using Crank Nicolson only aggrevates the problems in FDM schemes. There ARE better methods out there.

   5. TYPOS!! for example, equation (4.13) on page 122. The S term is missing.

   On the other hand, this book is aimed at real-life problems. However, extra detail needs to be added in my opinion in order to make it more accessible to a wider audience.




3. Reading this book produced three instances where previously encountered material was explained from a new and different point of view, the clouds parted, and I was bathed in the bright sunshine of understanding. Creation and valuation of hedging portfolios, reduced to their fundamentals, is now far less taxing to the memory. Explanations for the discretization of time and space now render previously mysterious numerical algorithms obvious in their intent. American options discused in a free boundry framework are far more intuitive than in the optimal stoping time approach. As much as I enjoyed the content, the occurence of numerous editing oversights was a considerable annoyance. This was even more surprising when I read the other customer review which indicated that one of the authors was an editor. Editors should be held to a higher standard and so I deducted an extra star!



4. Tavella and Randall have produced a compact, yet complete treatment of finite difference techniques in finance. I met Curt Randall in 1996 when his SciFinance software was in its infancy (though there is currently no connection between us). This software automatically generates C code to solve PDE's. That is an order of magnitude -- maybe two orders -- harder than just writing the code by hand. I inferred that Dr. Randall has a unique understanding of finite-difference methods for solving PDE's. For these reasons, I was very interested to see his book. For a more general treatment finite difference schemes, see Gordon Smith's 1986 book.

   The mathematical motivations for all the techniques presented are given, with no wasted exposition. I liked the lucid analyses of stability, which many books in finance gloss over. I also liked the mention and partial analysis of a large set of solvers of sparse linear systems. having not followed the literature on jump processes in recent years, I was quite happy to see their treatment as well.

   This book is all of what it claims to be, and no more. I do not recommend it as a textbook, or as a reference for those not already somewhat familiar with the subject, either from the mathematics side or the finance side. You will not get an explanation of what an eigenvalue or fourier transform is. The Lax Equivalence Theorem is cited, but not motivated or proven. No mention is given of when it might make more sense to use, say, a Monte Carlo scheme to find an option price. You won't find much economics in the book. But you will find a clear, correct, and useful analysis of more or less all aspects of finite difference schemes as they relate to solving contingent claims pricing problems.




5. The pricing theory due to Black Scholes and Merton is widely recognized as one of the most significant contributions of economics to practice. There are now many good introductory books surveying the vast literature on the subject. So what is needed is a book showing how to implement various models in practice. The book by Tavella and Randall is the first in what I hope is a series of such books. The authors are well known in computational circles: Tavella is the editor of the highly regarded Journal of Computational Finance and Randall is a Principal at SciComp, a leading developer of software synthesis technology for the finance industry. The authors focus on finite differences, which is an important generalization of the common tree approach, and thus is one of the most widely used numerical techniques in finance.

   The book's first two chapters introduce the mathematics of financial derivatives in an intuitively appealing manner. For example, measure changes are introduced as a powerful tool without strong demands on the reader in terms of background. Also, linear complementarity is used in the context of valuing American options, again in an intuitive fashion. The third chapter introduces finite differences in the context of the familiar parabolic PDE governing derivative security values. It is in this and the remaining chapters that much useful material can be found. For example, the cell averaging technique in chapter 4 is a very useful device for dampening the error introduced by slope discontinuities which commonly occur in financial problems. The authors also give the first textbook treatment of the important class of pure jump models such as the variance gamma model, which are growing in popularity. The chapter on coordinate transformations gives the finite difference version of what some finance people term the adaptive mesh method.

   In summary, this book is a must-read for anyone seriously interested in implementing derivative security pricing models. I hope the authors plan to follow up with a more advanced version which can cover such interesting topics as multi-grid, hopskotch, operator splitting, and the like.

3 comments about Pricing Money: A Beginner's Guide to Money, Bonds, Futures and Swaps.

1. Easy to follow, introductory guide. As the title suggests, this is a beginner's guide so there are no complex equations or other involved mathematics. Basic concepts are explained in a clear way with good examples to illustrate mechanics.



2. Extremely readable. One could read this book in a single sitting and get a great jumpstart to an understanding of fixed income markets - the why and the how.

   Wiseman has an engaging style of writing which prevents the stifled yawns normally associated with reading this genre, and keeps one turning the pages...

   The book nicely covers the fundamental theory of why there exists a fixed income market, then turns to the players and discusses what they do, and finally covers some of the fundamental trading strategies and math employed to turn a buck.

   Nice one...




3. i found this book very well written. It provides detail and yet covers that what it says it does. I find that Wiseman explains concepts in a verystraight forward way. Although i had to pause to eat and think about some of the financial products discussed such as "par yields". I found I was able to understand the book. The book contains some of the trader jargon and a outline of the players involved in the market. I think that anyone who wants to something with securities or trading should read this, before/during/after an intership. As the english say "Wiseman" is the dogs ballocks!! get this book!