Options, Perception and Deception: Position Dissection, Risk Analysis, and Defensive Trading Strategies

by Charles M. Cottle

Book Overview

Shows you how to analyze markets and choose positions, assess risk, and employ defensive trading strategies. Provides the most rigorous methods available to understand and manage options risk. This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 1557389071
• ISBN13: 9781557389077
• Release Date: January 1996
• Publisher: Irwin Professional Publishing
• Length: 381 Pages
• Weight: 0.95 lbs.
• Dimensions: 1.4" x 7.3" x 10.3"

Customer Reviews

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I wanted to comment on my experience with the book and some of the other customer reviews. You do not need to be a market maker or veteran options trader to read and get value from this book. I am a retail options trader, with a very serious full time job, and have virtually no mathematical aptitude, and I have already started benefiting greatly from the book. In my opinion you should make sure you have basic familiarity with how options work, and some of the basic outright positions and spread techniques and what market view they support, and you will be ready to start learning what options are really about from there. You cannot go wrong by using this book and Mr. Cottle's other materials as the very next step. Be under no delusion---after the basics---options can get very complicated very quickly--if you let them. I have discovered, contrary to my initial impression, that Mr. Cottle in fact through the use of detail is really attempting to simplify option strategy decisions and trading itself. Through the use of what seems to be complicated examples---CC cuts through the fog and gets to the meat of options strategies and how and why one might choose one over the other--and invariably the best choice is something straightforward. Based on what I know about him and my experience with his materials, he is committed to teaching. If you expect to read this book without pen and paper in hand, with little or no effort on your part, and have him simply say "do x and you will get rich" this book and his approach is definitely not for you. He is like any good teacher. He will make you work for the answer, but not leave you hanging when you struggle. In working for the answer---and having his approach, experience and techniques available--you will most assuredly gain a grasp of options and how to make money trading them that you never had before. Don't be intimidated when you first view the book. The presentation looks strange, the tools he uses will be different from those you have seen or used before, and the terminology will be strange to some. There is a reason he takes the approach he does and it will, with a modicum of effort, become clearer every time you are exposed to it and use it. Here is what it has done for me. It has forced me to actually think about what may be happening underneath the option quote and the day to day change in a position. It has convinced me that trading outright positions whether short naked or long does not necessarily produce the best results. Yes longs are problematic due to all the standard theta reasons, and yes naked shorts are risky---we all know that---the trick is to figure out how to take the inherent advantages of either of these approaches, and make them work for your view of the market without getting killed in the process. What he has made me a believer in is that risk can be reasonably controlled, while still making very attractive rates of return, and if you are looking for a method to make reaso

Updated Review by the Author

Reviewer: The author, Charles M. Cottle *** charles@RiskDoctor.com Although this original text was written for professional market makers, it proved to be a valuable resource for sophisticated retail investors and hedgers. I therefore created a new book, "Coulda Woulda Shoulda" (available for free download at www.riskdoctor.com) which borrowed about 80% of the original text and added more tools for non-professionals including an email dialogue with a relative novice, spanning 2 months. Most of the strict market making tools have been removed but will be resurrected in book 3; "Taming Your Portfolio" due out later this year.

Options Innovator

I read Options: Perception and Deception at least 3-4 times before many of the advanced concepts began to sink in. This is not a book for an options novice; in fact, I would suggest that most people read Natenberg's book on options prior to engaging in this incredible text. While many of the advanced 3-D graphs were beyond my grasp, I particularly liked Cottle's description of "real world" options positions, how he executed them and how he managed them throughout their duration. Of particular interest to many readers should be the concept of "gamma scalping", and the section on wingspreads and adjusting positions. This text is so far beyond "mainstream" options books, that words do not describe how important this book will become.

Excellent insights for the seasoned options trader

This book is certainly not a tome to learn about the world of options. The author gets straight to the meat of the attributes of options, and the repercussions of the risk they entail. So, I would certainly not recommend this book to a beginner - confusion and discouragement would likely result. However, once one has read some more straightforward option books, and gotten enough of a handle on options to have a good intuitive grasp of ideas like their volatility, multi-position strategies such as spreads, etc, then this book opens up serious opportunities. I'm very impressed with how the book is organized, the completeness of material, the examples (sometimes real-world based, which adds interest to a potentially dry subject). Much of the meat behind the materials is (rightly) mathemetical, so beginning calculus, and plenty of algebra and a fair amount of analytic geometry are definite prerequisites to really get a good understanding of the underlying concepts of ideas like "the greeks" and all the wonderful (2 and 3D) graphs presented. Lastly, I was very impressed with the accuracy of the data. No lazy editing or prose here. If you are contemplating becoming a "serious" options trader, by all means, read this FIRST. The price is small for the potential impact on your effectiveness in options trading. If you are already a serious trader, based on Cottle's observations (the "Perception and Deception" part of the title is no accident - consider the myriad implications of synthetic positions) I'd still be surprised if you don't learn something. I've read or scanned an estimated 30 books on options. I haven't found a peer for this effort.

First Option book for professional Market Makers

An option book that provides both - theory & practical insights into option trading and making two sided markets. It is also a great help in understanding and organizing risk while trading options as a professional. A great book for new and seasoned traders as well as risk managers.