Sheldon Natenberg is an options trader, educator, and author who is best known for his book ‘Option Volatility and Pricing: Advanced Trading Strategies and Techniques’. The book, which was first published in 1994, is considered to be one of the most comprehensive and authoritative works on options trading.
Sheldon Natenberg has been involved in the options industry for over 30 years and has worked as a trader, market maker, and risk manager. He is a frequent speaker at industry conferences and has taught courses on options trading at institutions such as the Chicago Board Options Exchange (CBOE) and the Options Industry Council (OIC).
In addition to Option Volatility and Pricing, Sheldon Natenberg has also authored several other books on options trading, including Option Spread Strategies: Trading Up, Down, and Sideways Markets and The Option Trader’s Workbook: A Problem-Solving Approach. He is highly respected within the options trading community for his expertise and insights into the complexities of the options market.
Option Volatility and Pricing: Advanced Trading Strategies and Techniques book summary
Option Volatility and Pricing: Advanced Trading Strategies and Techniques” by Sheldon Natenberg is a comprehensive guide to understanding and trading options. The book covers a wide range of topics related to options trading, including option pricing, volatility, risk management, and advanced trading strategies.
The book starts with an introduction to options and their basic characteristics. It then goes on to discuss the Black-Scholes model, which is used to price options, and the various factors that affect option prices, such as time decay, volatility, and interest rates.
Sheldon Natenberg also provides a detailed discussion of volatility, which is a key component in options pricing. He explains the different types of volatility, how they are measured, and how they can be used in trading strategies.
The book also covers various trading strategies that can be used with options, including vertical spreads, horizontal spreads, and diagonal spreads. Sheldon Natenberg provides detailed explanations of each strategy and discusses the advantages and disadvantages of each approach.
Throughout the book, Sheldon Natenberg emphasizes the importance of risk management in options trading. He provides guidance on how to manage risk, including setting stop-loss orders, using options to hedge positions, and managing overall portfolio risk.
Overall, Option Volatility and Pricing is an excellent resource for anyone interested in options trading. It provides a thorough and detailed discussion of the key concepts and strategies involved in options trading, and is highly regarded within the options trading community.
Key takeaways from the book
Here are some key takeaways from “Option Volatility and Pricing: Advanced Trading Strategies and Techniques” by Sheldon Natenberg:
Understanding the basics: The book provides a comprehensive understanding of the basic concepts related to options trading, including option pricing, volatility, and risk management. This knowledge is crucial for successful options trading.
Risk management: The book emphasizes the importance of risk management in options trading. It provides various strategies for managing risk, including setting stop-loss orders, using options to hedge positions, and managing overall portfolio risk.
Trading strategies: The book covers a wide range of trading strategies, including covered calls, protective puts, vertical spreads, gamma scalping, calendar spreads, and ratio spreads. It provides detailed explanations of each strategy and discusses the advantages and disadvantages of each approach.
Implied volatility: The book provides an in-depth discussion of implied volatility and its role in options pricing. It explains how to measure volatility, and how it can be used in trading strategies.
Black-Scholes model: The book provides an introduction to the Black-Scholes model, which is used to price options. It explains the various factors that affect option prices, including time decay, volatility, and interest rates.
Skew: The book covers skew, which is the difference between the implied volatilities of options at different strike prices. It explains how skew can be used in trading strategies, including the use of spreads and straddles.
Delta neutral trading: The book covers delta neutral trading, which is a strategy that involves balancing the delta of an options portfolio with the underlying asset. It explains how to calculate delta and provides examples of how to use delta neutral trading to manage risk.
Overall, Option Volatility and Pricing provides a comprehensive guide to options trading, including advanced strategies and techniques. It emphasizes the importance of risk management and provides a thorough understanding of the various factors that affect options prices. The book is highly regarded within the options trading community and is considered a must-read for anyone interested in options trading.
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