Day Trading Options: Profiting from Price Distortions in Very Brief Time Frames

5 Responses to “Day Trading Options: Profiting from Price Distortions in Very Brief Time Frames”

Comments

Read below or add a comment...

1. W. Coleman

   January 27, 2010 at 4:56 pm

   I purchased this book with high expectations only to be completely disappointed. It may be fine for mathamatic scholors but regular folk should just put their money in the bank.
   Rating: 1 / 5
2. Fernando Saldanha

   January 27, 2010 at 5:26 pm

   I rarely review books, but in this case I have to warn potential buyers about this book. There is no question in my mind that this book is totally worthless.

   About 60% of the whole book is dedicated to describing in detail “successful” trades that were all entered with the benefit of hindsight. For example, the author shows a chart for a stock in the options expiration day. The stock price fluctuated for a while and then “pinned” to a strike price. Then the author shows in detail how selling a straddle at that price would have been very profitable.

   And conversely, there are examples of stocks in expiration days where the price has drifted away and in that case (you have guessed it!) going long vol would have been a great trade.

   All I can say is: Duh!

   There is absolutely no statistical analysis of whether entering a certain type of trade under certain conditions would have been profitable or not. There are some useless statistics about “pinning” to strike prices and “crossings” but these provide no basis for trading. Especially since i) transaction costs are never taken into account, ii) the statistics do not adjust for a variety of factors like different spacings between strike prices for different stocks, different volatilities for different stocks, etc.

   Please save yourself some money: skip this book. I suggest also not buying any books from the author. Anyone who has the gall to publish such a book must not be trusted to write anything useful.

   Rating: 1 / 5
3. Michael Evenholt

   January 27, 2010 at 6:07 pm

   I find this book very informative on volatility in the aspect of how to evaluate options in different time frames

   Rating: 4 / 5
4. Leo Batfish

   January 27, 2010 at 6:38 pm

   Users of Optionvue should take note of this book. Although Optionvue is limited modeling the most important concept in this book –graphing stock movement as standard deviations, users can nonetheless grasp concepts about trading implied volatility that are beyond the scope of the remainder any of the books on Volatility and Optionvue’s own basic tutorials.
   What distinguishes this book from all the rest is an explanation of situations where volatility trades can be profitable, techniques that are useful and the entry and exit points. Careful reading also makes condors and butterflies less attractive when the number of average volatility spikes for stocks greater than 2 and 3 standard deviations does not vary much between low and high volatility stocks in the same time frame. The information also hightlights
   Optionvue’s inability to visualize important information about volatility. Chapter 4: Working with Intraday Price Charts is totally beyond the capability of Optionvue modeling. This chapter introduces a new charting tool which models price change in the context of volatility. FASTMONEY commentators often state that a stock’s option has a $5. 00 move priced in. This book explains the concept of graphing stock price change over any period of time as a standard deviation, not as price change or percentage. Chapter 5 discusses special events that can be traded and the usefulness of graphing stock price as a standard deviation.
   In summary, to the informed this small book is a great tutorial by a great teacher. The concepts are both original and based on years of experience as a trader. It makes the case for short term trading, but more importantly explains the best way to profit from volatility. This book is 168 pages. Good things, when short, are twice as good.

   Rating: 5 / 5
5. Michael Benklifa

   January 27, 2010 at 8:53 pm

   Each chapter in this book really could be a book in itself. The first chapter on technical analysis actually made me laugh out loud. Mr. Augen applies popular indicators to randomly generated graphs to illustrate a point that he makes statistically, namely, stock prices do not contain information about what will happen next. Coming to terms with this reality should save investors a fortune. In the next chapter he then proposes a statistically based indicator rather than one based on moving averages. I’ve found it to be very predictive because it is based on the reversion to the mean concept. The third chapter is really fabulous for hard core options traders. Taking advantage of the differences between the intraday and interday volatility to create a day trading strategy is an opportunity not to be missed. I love these books that are intelligently written, not get rich quick, and very real world practical.
   Rating: 5 / 5