My library has other titles in this series, and when I saw this one I decided to see if it was worth grabbing. It's one of the more interestingly-written books on the topic, and the author does take time to discuss risk. I think the patrons will appreciate it.

“Options Trading 101,” by James Royal, is an excellent primer on options trading. The author provides a thorough overview of options, including basic and advanced options strategies. By nature, options are risky and volatile. Therefore, the author cautions that options trading is best suited for experienced investors and suggests that those starting to trade options initially stick to basic options strategies and only risk amounts that they can afford to lose.

The author begins by discussing options fundamentals, including what an option is and how it is formed. By definition an option is a financial derivative whose price is “derived” from the price of an underlying asset (e.g., a stock). The option is structured as a contract between two parties—i.e., a buyer and a seller—where the buyer has the right, but not the obligation, to buy or sell the underlying asset at a stated price (“strike price”) on or before a certain date (“expiration date”). In exchange for this right the buyer pays a fee (“premium”) to the seller, which the seller keeps regardless of whether the buyer exercises the option before it expires. If the buyer exercises the option, the seller is obligated to buy or sell the underlying asset at the strike price; if not, the option expires worthless. The author states that options trading is a zero-sum game, where the profit earned by one party equals the loss incurred by the counterparty.

Next, the author covers the two major types of options: call options and put options. When the underlying asset is a stock, a call option gives the buyer the right to “buy” the stock from the seller at the strike price and is considered “in the money” when the stock price is above the strike price. Conversely, a put option gives the buyer the right to “sell” the stock to the seller at the strike price and is considered “in the money” when the stock price is below the strike price.

The rest of the book is primarily devoted to basic, intermediate, and advanced options strategies. The author does an outstanding job examining these and includes pros, cons, and/or examples of each strategy. The author first reviews the four basic options strategies: long calls, short calls, long puts, and short puts—where the “long” party is the option buyer and the “short” party is the option seller. These core strategies are foundational to the intermediate and advanced options strategies that the author subsequently explores (e.g., covered calls, protective puts, synthetic options, straddles, strangles, and spread options). Consequently, the author advocates mastering the core strategies before using intermediate or advanced strategies.

The book is also sprinkled with other useful information, including the importance of understanding performance metrics, macroeconomic conditions, and other factors that influence the market valuation of companies. The author addresses these factors and stresses that an insufficient knowledge of them could increase downside risk when trading options. The author also speaks to options pricing. This includes how and why the options premium is comprised of two parts—i.e., intrinsic value and time (extrinsic) value—and how “the Greeks” (e.g., Delta, Gamma, Theta, Vega, and Rho) are used as variables to measure the price sensitivity of options. The author also tackles actual options trading, including how to read an options chain (e.g., find options prices), how the options cycle works, and how to place options trades.

For those seeking a practical understanding of options and options strategies, “Options Trading 101” is a well-written, informative, and beneficial read. James Royal is an established writer and seasoned options trader. The knowledge and advice that he shares can help readers become successful options traders.

[My special thanks to Adams Media (Simon & Schuster) and NetGalley for an advance reading copy of this book.]

Great writer but I really could not get into this story. Thanks for the opportunity to read but it was just not for me. Good Luck with the boo.