Options as a Strategic Investment Author: Visit Amazon's Lawrence G. McMillan Page | Language: English | ISBN:
0735204659 | Format: EPUB
Options as a Strategic Investment Description
- Hardcover: 1072 pages
- Publisher: Prentice Hall Press; 5 edition (August 7, 2012)
- Language: English
- ISBN-10: 0735204659
- ISBN-13: 978-0735204652
- Product Dimensions: 9.4 x 7.9 x 2.5 inches
- Shipping Weight: 3.2 pounds (View shipping rates and policies)
Several years ago my broker recommended the 4th (2002) edition of this book. I liked it so much that I bought two of McMillan's subsequent publications: McMillan on Options, Second Edition (Wiley Trading) (cited as McMillan, 2004) and Options for Volatile Markets: Managing Volatility and Protecting Against Catastrophic Risk (Bloomberg Financial) (cited as McMillan, 2011). I've learned much from McMillan's books and have given them four-star reviews; however, I am a bit disappointed in the updates to this 5th edition.
Having read the 4th edition and two subsequent publications, I did not find any significantly new material in this 5th edition. About 85% of the book repeats information in the 4th and possibly earlier editions. The new material includes a chapter on mathematical applications (pages 447 - 477) and an expanded discussion of volatility (pages 767 - 947). The mathematical applications give a good overview of an option's theoretical value. If you want to learn how to calculate theoretical values, however, you should also read Options, Futures, and Other Derivatives (4th Edition) (Hull, 2011).
Although new to this book, much of the information on volatility was previously published in McMillan 2004 (pages 241-568) and McMillan 2011 (pages 171 - 204).
When I started trading options a dozen years ago, one of the first books I bought was this one. As a Biblical scholar I love big, fat, reference books, and in this case I was well rewarded by long (sometimes too long) and thorough analyses not only of every option strategy I've ever heard of but of the many mathematical and other issues involved. I bought this new edition last year as soon as it appeared, and the updates are more than worth the price even if you have (as I did) a thoroughly-studied and much-annotated copy of the previous version. After a descriptive section (Part I) on what options are and the workings of the option markets, McMillan treats all the call strategies (Part II), from simple purchase and covered-call writing up to the most complex, and then starts over with long and short puts (Part III), working in several combined call/put strategies as he goes, and finishing with a complex strategy he says anyone who trades naked short options should use (and I do). The sequence develops logically and helpfully; though I need continually to refer back to earlier sections, I find reviewing the prior material illuminating. And I have needed to read and ponder much of it repeatedly, not least after I've had some experience applying what he says to my own trading.
After 400 pages come other sections on arbitrage and mathematics (Part IV), index options and futures (Part V), and volatility (Part VI, with more advanced mathematics, a brief treatment of tax questions, and a helpful section on assessing what strategies individuals might prefer). Six appendices include strategy summaries, equivalence, and portfolio margin, among others.
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