Book Review: Options Volatility Trading By Adam Warner - Part I

I have begun reading Adam Warner's new book Options Volatility Trading: Strategies for Profiting from Market Swings. For those of you who don't know, Adam writes the excellent and influential blog Daily Options Report. I started reading Adam's writing when he co-wrote the options column on Street Insight (part of the TheStreet.com family) from spring 2003 to spring 2005. He is currently Options Editor at Minyanville.com. You can read his profile at his About on his blog.

Readers should know that I correspond occasionally with Adam and have tremendous respect for him. I have learned a tremendous amount from his articles and from his answers to my questions. Moreover, I admired his warning readers that they might wish to exercise caution when following Lenny Dykstra's options articles on The Street.com. His warnings were long before Dystra's problems became fodder for the mass media, including CNBC. Adam is a friend and thus I will likely be biased in my review of his book.

So far, I have just covered the Introduction, Chapter 1: Who Am I? Why Am I Here?, and Chapter 2: Know Your Greeks. The introduction is great because Adam sets out that the book will not be a cookbook with easy to follow recipes for success nor will it be steeped in heavy mathematics or formulas. Instead, the book will be focused on how to use information and data to manage an active account or portfolio with an ever changing set of circumstances. Adam provides his personal background in Chapter 1. I found knowing his background interesting for a couple reasons. First, I was amazed at how primitive the options markets were only a few years ago. And second, because of Adam's experience as a floor trader at the Amex Option Exchange, I know that Adam has a well honed intuitive feel for the markets and is able to think rapidly on his feet. In Chapter 2, Adam provides the reader with a high level overview of the major Greeks in options trading. As stated earlier, Adam skips over the mathematical treatments and provides the reader with the essential information.

If you are just starting out with Options, this book is not your best starting point. You should have a basic understanding of calls and puts. If you don't have that understanding, the free educational videos at Options New Network ONN.TV are a good resource. You don't require an in-depth understanding of options to read Adam's book. However, you should know what calls and puts are and understand their basic payoff diagrams.

So far, I am thoroughly enjoying Adam's book. After a few more chapters, I will provide another update.

On Sunday, 18 July 2009, I photographed the Weaselhead area in North Glenmore Park in Calgary. I know that Adam enjoys riding his bike, so I thought this photography from one of my bike rides was an appropriate photograph to include with my review. And, if you click on my Flickr profile link, you will be taken to Flickr where you can see more of my pictures.

Disclosure: I am long TheStreet.com stock. And as part of the Amazon Associate program, I receive remuneration for each book sold by clicking on the Amazon.com links in my article.