4 comments about Options on Foreign Exchange (Wiley Series in Financial Engineering).

1. the product was fine it was the shipping that was utterly horrible. these two books nboth came over 1 week late and cost me time in studying for a class. very dissappointed in delivery



2. Mr De Rosa has written a well structured
   introduction into the forex option market.
   The clear examples and the pleasant writing
   style make it an easy read (two nights, tops!).
   Starting by showing the reader an EBS
   dealing screen, he explains the price setting using the Black-Scholes model.
   A bit more explanation might have been
   in order on how the interbank market
   really works in practice (volatility runs for ATMS Straddles, market making, etc...).
   The section on exchange traded options and
   futures is interesting for readers unaware
   of the important differences with the OTC market.
   The formulas for the Greeks contain almost
   no typo's thus making the book useful as
   a reference for a programmer.
   The section on barrier options is a bit
   disappointing. The relationship between
   higher order derivatives and the volatility
   smile might not have been out of place
   (I am referring to the celebrated "three option
   method" to quickly price exotics without
   having to use MC-simulation).
   Also, when introducing alternatives to the
   BS-model, the formulae appear as by Deus
   ex Machina. Nothing is said about calibration
   difficulties. And when introducing alternative
   models, why not going into long term fx
   options ?
   All in all, I would recommend the book to
   any beginning forex option trader or salesperson,
   but as those people generally do not earn the
   largest of salaries, it is even better if they
   borrow it from their institution's library.



3. This book is a nice introduction to the subject. A trader would benefit from reading the text more than a financial engineer would. It may be a good idea to read the author's "Currency Derivatives," as well. People who have read any text at the level of Hull or higher are advised to move on to "Currency Derivatives" directly.



4. This second edition has been greatly expanded with materials on the mechanics of the foreign exchange and options markets. The sections on the international monetary system have been updated, especially with respect to the European monetary system. New sections have been added on exotic currency options, specifically on barriers, average rate, basket and quantos options. There are two new chapters, one on currency option applications and another on currency overlay management.

1 comments about Equity and Index Options Explained (Wiley Trading).

1. A distinctive feature of the book is its lack of equations. The author chose to explain many aspects of options without resorting to equations. Hence no writing of the seminal Black-Scholes equation, let alone its derivation. Likewise the Greeks are gone into, alpha, beta, gamma, vega etc. But for each there is instead an extensive qualitative description.
   
   What this means is that the book won't suffice if you want to devise new instruments based on these options. But if you want to trade, the author makes the good point that a qualitative understanding should suffice. This is probably true for many day traders. Where the software you are using, perhaps on a Bloomberg, actually has an implementation of the necessary equations and so handles the quantitative aspects.
   
   The book can thus expand the accessibility of options to a non-mathematical audience.

No comments about Trading and Investing in Bond Options: Risk Management, Arbitrage, and Value Investing.

5 comments about Financial Analyst's Indispensable Pocket Guide.

1. I'm studying for CFA and bought this book to have quick reference to concepts I already covered.
   I'm very happy with the book. While studying, if I'm unsure about a concept or find the text book definition to vague or too long, I refer to this guide.
   It keeps everything short and sweet. Intuitively sorted by topic areas.
   I definitely recommend it.



2. It is a very practical guide for handy information. It is quite usefull for my daily work needs.



3. I'm not a CFA candidate, but I've been an investor for years and always appreciate learning more about the field. My father was president of the CFA for a couple of years, and after 15 years working on Wall Street I have a reasonably broad understanding of some finance.

   What impressed me most about the book was how short and terse the definitions were. Clearly they are useful and present good insight into what's important and why.

   What impressed me least was the lack of mathematical rigour (perhaps one can't have both brievity and exactness?). For example, many of the formulas only work for specific instances, and details about yield/rate conventions are omitted.

   Overall, it struck me as useful overview and quick reminder to financial analysis and the language/terms used. It's not really indispensable, and is not authoritative. But for a quick refresher, or ballpark estimates it's fine.




4. This is the only book of its kind, so far. The author compiled this pocket guide after completing his CFA program and realising that the vast concepts, terms and designations learnt were soon being forgotten.

   That being the case, candidates of, as well as those who have completed, the CFA program would find this book a useful one-stop guide to all those concepts, terms and designations learnt in the pursuit of the CFA designation.

   The book is arranged broadly around the various topics of the CFA program i.e. Quantitative Methods, Economics, Financial Statements Analysis, Equities, Fixed Income, Derivatives, Real Estate, Portfolio Management, Ethics, Behavioural Finance. As such, the CFA candidate would find this book more useful than say, a general finance/business masters student.

   But I reckon that this book, though published as recent as this year, is already in need of an update. The CFA syllabus is constantly evolving. As a result, a number of concepts in say, Level 1 of the CFA Program, are not found in this book. Also, a number of the textbooks used in the CFA program which the author had based his book on, have either been superseded by newer editions or replaced all together.

   All in all, I found this to be a useful book and a unique concept. Until a better book comes along, I will be using this book religiously to prepare for the CFA exams as well as to refresh my memory.




5. As a CFA candidate, I find this to be a useful summary of the key concepts that we are taught during the course of the programme. However, regard it as more of a "Cliff's Notes" of the programme -- with all its inevitable shortcomings -- but a handy little reference piece nonetheless. After completion of the programme and years down the road, I am sure that I will find it quite useful in helping to jog my memory and the sleepless nights that the CFA programme gave me! -- I hope, however, that a revised version will be introduced and perhaps with a less odd title. It is not a book for everyone, but anyone who wishes that s/he had made notes whilst studying for the CFA programme will find this book useful.

1 comments about Trading Against the Crowd: Profiting from Fear and Greed in Stock, Futures and Options Markets.

1. Lots of books have been written about options and related stuff like Greeks or complex strategies like "Short Iron Butterfly". This book is not about options per se. It uses options merely as a tool to predict market tops and bottoms. It uses very simple indicators like as put/call ratios and option-implied volatility. This book does not teach you about options. It assumes that you are already familiar with stocks and options market.
   
   Many books have been written about contrary opinion in regards to investing, and most famous is "Security Analysis" by Graham and Dodd. Actually, many of the original works in the area of investor sentiment are from a long-term investing perspective, and largely examine the issue through contrarian analysis of stock market fundamentals, such as intrinsic value and growth prospects. The book "Trading Against the Crowd" ignores fundamentals and instead focuses only on sentiment technicals. In addition to option put/call ratios and volatility, it relies on short sales, advisory opinion, investor surveys, and quantitative news flow. By using these sentiment measures, it is possible to identify investor sentiment extremes and associated market turning points. A unique dimension to this book is the combination of price triggers with sentiment gauges.
   
   In addition to this book, I recommend "Art of Contrary Thinking" by Humphrey B. Neill, "Crash Proof 2.0" by Peter D. Schiff and "The Only Three Questions That Count" by Ken Fisher.

No comments about Options: Essential Concepts and Trading Strategies.

2 comments about Valuing Employee Stock Options (Wiley Finance).

1. Jonathan Mun is one of those authors with lean credentials who write a book to establish themselves as experts in a field, rather than seeking to clarify an admittedly complex suject for the reader. In so doing, he manages to cram a 15-page paper into a 300-page book, primarily by being repetitive and secondly by including lots of obscrure tables.
   
   Aha!, one says, I'll load the accompanying C.D. and work my way through the spreadsheet examples. Well, unfortunately the speadsheets are not operational. In order to use them, you have to buy the author's working version for a mere $1,000. For even more, you can buy Mun's corporate solutions for HR departments. In other words, the book is simply one long advertisement for Mun's software company, and is of limited usefulness to readers seeking to understand the complexities of ESOs.
   
   This is not Wiley's standard practice. For instance, another of their books ["Financial Modeling" by Chandan Sengupta], which discusses option pricing using lattice models, contains a cd with working Excel spreadsheets that are fully operational. Unfortunately, it does not discuss ESOs, which differ somewhat from regular stock options.
   
   So what are the alternatives?
   
   1. The casual user (e.g., an employee who wants to get an idea of what his stock options are worth) can use one of the many calculators for general options available for free on the internet. A good one is the Option Pricing Calculator by OTrader Software.
   
   2. Three useful articles for understanding the basics of lattice models are "Valuing employee Stock Options Using a Lattice Model" from the December 2004 issue of the CPA Journal, "Valuing Employee Stock Options: A Binomial Approach Using Microsoft Excel" from the July 2005 issue of the CPA Journal , and "How to 'Excel" at Options Valuation' from the December 2005 issue of the Journal of Accountancy. All three articles contain Excel spreadsheets as examples.
   
   3. Readers wishing Excel spreadsheets that incorporate all of the features unique to EOSs (vesting periods, termination, illogical behavior, etc.) may wish to consider purchasing (@ 1/15 of Mun's price) Peter Hoadley's ESO package over the Internet. He also provides (for free) links to academic papers on the subject.
   
   NOTE: The book describes Mun's credentials as follows:
   
   "JOHNATHAN MUN is Vice President of Analytical Services at Decisioneering, Inc., the makers of Crystal Ball° analytical software. His duties focus primarily on heading up the development of real options and financial analytics software powered by Crystal Ball. Prior to joining Decisioneering, he was a consulting manager and financial economist in the Valuation Services and Global Financial Services practice of KPMG Consulting, and a manager with the Economic Consulting Services practice at KPMG LLP. He holds a PhD in finance and economics, and an MBA and MS in management. Mun is also certified in financial risk management and in financial consulting. He is currently a visiting professor in finance, economics, and statistics at various universities, including the University of Applied Sciences (Germany), the Swiss School of Management (Switzerland), and Golden Gate University (California). Mun is the author of Applied Risk Analysis, Real Options Analysis, and Real Options Analysis Course, all published by Wiley. He continues to offer worldwide seminars and lectures on the topics of real options, simulation and risk analysis, and corporate finance."



2. The book does a decent job of providing intuition on why traditional Black-Scholes framework will not work for Employee Stock Options. But then again, if directional intuition is what you are seeking, why spend the money on this book when you can get the same information by reading articles published in the Financial Analysts Journal (FAJ)? The book and the accompanying CD seem to be very cryptic when it comes to understanding the effects of early exercise. The CD is pretty much a black-box. If you think you can buy this book and explain the results of the analysis, then you are mistaken. Unless you have a PhD in Finance or a Masters in Financial Engineering, you may not understand what the algorithms do. Then again, if you had these degrees, you wouldn't need the book!

No comments about Increasing Alpha with Options: Trading Strategies Using Technical Analysis and Market Indicators.

No comments about Options: Trading Strategies That Work.

No comments about Quantitative Strategies for Derivatives Trading.