economics

I have just finished reading Jay Kaeppel's 1998 publication "The Four Biggest Mistakes in Option Trading". I found the book to be the most down to earth common sense approach to options trading that I have read to date.

This is a good book, though a bit pricey for a book that can be read in less than 1 hour.

In it the author describes the biggest mistakes option traders make which are: ignoring implied volatility, making long-shot bets with options, using strategies that are too complex (for you), and trading illiquid options.

Material is good, with a chart of which strategies work the best for varios levels of implied volatility and other gems, but it's debatable if this book is worth its hefty price tag.

This book is useful in directing novice options traders to the four biggest mistakes usually made in this area. The book does what is says with describing the theory behind the authors arguments but unfortunaly does not provide market examples on how that should be implemented in real life. Having read other books by this author, I am sure he is capable of supplementing his theory with examples . One of the mistakes he mentions is buying only out of the money options and he recommends buying in the money options. Unfortunately he does not address the fact that this approach could still result in a total loss if the option ends out of the money by expiration day. In addition to be successful in trading in the money options your timing needs to be accurate enough to be certain you do not face a total loss. Timing is never addressed in this book and you would need to supplement this by other books that focus more on this area.
Why 5 stars? Even with these shotcomings it is important that beginners know where they can go wrong and then focus on what to do right.