The book Options as a Strategic Investment by Lawrence G. McMillan is considered one of the most comprehensive guides on options trading and strategies. First published in the 1980s, this highly popular book has been updated multiple times with new editions. For anyone looking to gain a deeper understanding of options and how to utilize them in trading and investing, this is a must-read resource. In this article, we will explore some of the key takeaways from Options as a Strategic Investment that make it such an invaluable book for options traders.
In-Depth Coverage of Options Concepts and Strategies
Options as a Strategic Investment provides an extensive overview of options fundamentals, including how options work, pricing models, basic strategies like covered calls/protective puts, and advanced strategies like spreads and combinations. The author covers both theory and practical application, allowing readers to gain a robust understanding of options. Key options strategies like straddles, strangles, butterflies, condors, collars, and more are all explained in detail.
Focus on Using Options to Enhance Returns
A core theme in the book is using options to generate consistent returns while managing risk. Strategies like covered calls and protective puts can boost returns on stock positions. Certain advanced strategies allow creating defined risk-reward profiles. McMillan stresses the importance of match options strategies to market conditions and investment goals.
Advice for Trading Psychology and Risk Management
Given the leveraged nature of options, risk management is critical. McMillan dedicates a section to trading psychology and risk control. He discusses important concepts like avoiding emotional biases, focusing on high-probability trades, limiting position sizes, using stops, and managing the greeks. His risk-focused approach aims to help investors use options successfully over the long run.
Expanded Content in New Editions
While the core concepts remain relevant decades later, new editions of the book have expanded content on contemporary topics. Recent versions cover weekly options, options regulation changes, volatility-based indicators like the VIX, and trading trends like algorithmic systems and electronic trading platforms. The classic text has evolved along with options markets.
Options as a Strategic Investment offers an in-depth education on options strategies and practical trading techniques. The book has maintained popularity over decades by providing clear explanations of options fundamentals while also expanding content to reflect evolving markets. Traders of all skill levels will gain key insights from this definitive guide.