Traded Options Section

The Best Author On Traded Options Has Updated His Book - Free Download

June 2005

Let's get a few things perfectly straight about Traded Options -

99.9% of the books written on options are a waste of money because they just explain the theory without going into the real practicalities of trading and making money
If you want to make money with options overtime then you HAVE to work very hard at understanding them as well as your personal trading education (this usually can only come about with experience)
Option education is like an iceberg, the 10% that you can see generally seems easy to understand, perhaps this is the reason why 90% of all non professional option traders lose over time (by non-pro we mean traders/investors whose main job is not dealing in options
If you still want to trade in options (or believe you can) without a full understanding of just how important the correct training and experience is, then think about who is normally taking the opposing side of your trades? The professionals! And you can bet they know their theory and markets inside out

We don't mean to scare you but if you don't face up to the facts above it's likely you'll be financial cannon fodder or the pros.

What Is A Professional Option Trader

First up, there is really no such thing as a professional option trader, rather the professionals are market makers, providing liquidity by offering two way bid-offer prices. By providing these markets they'll create what's known as an 'options book' or portfolio of options. This book will then be managed on a daily basis with the aim of making steady profits overtime.

However, option pros are human and therefore affected by the natural fear & greed that's within all of us, so blow ups and horrendous losses can and do happen.

How You Can Hold Your Own Against The Professional Option Traders

We suggested in Point 1 above that 99.9% of all option books are not worth their money. But what about the 0.1%, is that book any good?

Yes it is, and it's just been republished and updated.

Charles Cottle is regarded as the world's number one option teacher, is an incredible trader himself as well as boss/founder of the number 1 option brokerage company in the world - ThinkorSwim.

This is the 3rd book his series and it's called Options Trading: The Hidden Reality
Not available in the UK but Amazon US have it at around $85 plus postage (normally around $5 and it takes 10 days)
Note, it's also available in PDF format for just $44.95 - More details

The main premise of the book is that new traders think they've found trading nirvana because options offer limited risk (can't lose more than the price of the option) with potentially unlimited reward (an option bought for £1 can theoretically go to £1000 or more). But Cottle's ideas focus much more on Risk, or as he puts it 'risk perceptions' and 'risk deceptions'.

Why You Need The Book

Cottle asks a very simple question in the introduction of the book. We estimate that over 90% of readers who believe they understand options will get this wrong. The question is this -

What's the maximum loss on this position

ABC stock is trading at 39.00
Buy 10 36.00 calls @ 1.70
Buy 10 39.00 puts @ 1.90
Note that each put/call is on 100 shares, so the costs are therefore -
10 x 1.70 x 100 = 1,700
10 x 1.90 x 100 = 1,900
Total Cost = 3,600 for the 10 calls and 10 puts

So the maximum loss on the option position must be 3,600, right?

WRONG - The maximum loss is actually only 600!

That right there is the iceberg principle in effect (see point 3 in the introduction) and why your option eduction must start with SOLID FOUNDATIONS.

Summary & Free Book

So the only option book that's worthwhile is Options Trading: The Hidden Reality by Charles Cottle, and in our view unless you read, understand and work very hard on your education there's little chance that you'll make money overtime using options (anyone can get lucky in the short term).

But the good news is twofold -

By reading and putting into practice what Cottle suggests we'd estimate that you chance of making money in options (overtime) goes up by a minimum of 1000%
Cottle has released a free 91 page PDF download of the book so you can check it out - Download the book (PDF format)

Also available is a 2 page review on the book at

Good luck with your options trading and sorry if we've ben too harsh with our words but real time experience has shown us just how much money is lost in the options arena from traders and investors who are not just prepared enough. Being harsh about the reality of what new traders are up against while showing them the best chance of making money is for their own good