The Unlucky Investor's Guide to Options Trading

by Julia Spina, Tom Sosnoff (Foreword)

An approachable guide to sustainable options trading, minimal luck needed. Traders who are successful long-term do not rely on luck, but rather their ability to adapt, strategize, and utilize available tools and information. Modern markets are becoming increasingly accessible to the average consumer, and the emergence of retail options trading is opening a world of opportunities for the individual investor. Options are highly versatile and complex financial instruments that were exclusive to industry professionals until recently. So where should beginners start? The Unlucky Investor's Guide to Options Trading breaks down the science of options trading to suit interested traders from any background. Using statistics and historical options data, listeners will develop an intuitive understanding of the potential risks and rewards of options contracts. From the basics of options trading to strategy construction and portfolio management, The Unlucky Investor's Guide to Options Trading guides listeners through the world of options and teaches the crucial risk management techniques for sustainable investing.

Genres: Finance, Nonfiction, Audiobook

213 pages, Kindle Edition

Published February 15, 2022

Reviews

[Gregg Zumwalt · Rating 5 out of 5]

Too bad they don't allow 10 star reviews. I've traded options for a long time and have had to dig nuggets from probably a hundred other authors but never have I seen someone explain basic options, risk, account management and correlation of pairs so thoroughly and succinctly. Great potentially money making strategies thoroughly explained. One of the few books that addresses max risk statistics when trades don't go as planned. No rose colored glasses here, just informative about probabilities of long term success. Good job to all who contributed to this finished product.

[Mark Bradley · Rating 5 out of 5]

An excellent book on practical options trading. Very well researched with tons of sophisticated analysis that gives insight into trading options. Not a great rich quick book. It tells the hard truth about how to make money one day at a time. Easy to follow if you have some background and like cool graphs.

[Mark Collins · Rating 5 out of 5]

great book

I really like that this book uses mathematics to show the edge with options trading. It has a lot on how to manage a portfolio and how to avoid wiping out your account.

[Martin · Rating 5 out of 5]

aka how not to gamble in the stock market

A good book on how to be the “house” in options market instead of using the option at WSB casino.

[Caleb · Rating 5 out of 5]

This is not an introduction to options for beginners. If you have no idea what an option is, you'll want to start with something like tastytrade's free beginner options course (find it on tastytrade's website).

Anyone who's been around tastytrade for a long time will likely not be surprised by anything in this book, BUT it lays everything out with research, etc to help you learn how to construct and manage a short options portfolio, and I'm benefiting from it and rethinking how to allocate my portfolio (Chapter 7 is where I finally started to realize I should probably consider and rethink my core vs supplemental positions). I can see myself referring back to this book for refreshers in the future. Highly recommended!

[Y T · Rating 4 out of 5]

A book written with a heavy focus on statistics. Not a bad idea but might prove a little heavy for most readers. The stats don’t lie in terms of how options are structured along with the various probabilities of profit.

I’ve learnt that longer dated options contracts are less susceptible to tail risk where the gamma affects the probabilities of profit towards the expiry of the options.

I’ve also learnt that there’s no strong evidence for consistent edge trading around binary events, e.g. earnings. Earnings trades are typically opened a day before and closed the day following the earnings.

Overall still an interesting read.

[Eric Eskin · Rating 5 out of 5]

Great Deal of Excellent Info

The ratio of key information per written word is extremely high—-easily my most highlighted book. The density of information is a double-edged sword…. Very efficient read but does require several passes through post the initial reading. Highly recommend!

[Brian · Rating 4 out of 5]

This was a great look at options trading, and provided a compelling mathematical analysis of how trading from the short side on near dated contracts tilts the odds in your favour. I was hoping for a deeper analysis on whether holding LEAPS options could be a viable stock replacement alternative. This book didn’t cover this strategy.

[K Huffman · Rating 5 out of 5]

Options trading has a steeper learning curve compared to equities, and options trading also requires a better mathematical knowledge base. Unlike many options trading books that rely heavily on complex math and equations, The Unlucky Investor's Guide to Options Trading takes a more practical approach. Instead of overwhelming readers with formulas like most options trading books, Julia Spina emphasizes understanding the principles behind options trading, such as managing risk, thinking in probabilities, and understanding the strategies. This approach makes the book ideal for readers who want to learn how to trade effectively without getting bogged down by unnecessary technical details.

Book Chapters

At the end of each chapter in this book is a very nice Key Takeaways page that does a great job of summarizing the chapter. This is useful for future references when you want to skim through the book but not read everything again. 

Volatility

“Options are effectively financial insurance, and they are priced according to similar principles as other forms of insurance. Premiums increase or decrease according to the perceived risk of a given underlying (a result of supply and demand for those contracts) ... To quantify the perceived risk in the market, traders use implied volatility (IV) … When options prices increase (i.e., there is more demand for insurance), IV increases accordingly, and when options prices decrease, IV decreases. IV is, thus, a proxy for the sentiment of market risk as it relates to supply and demand for financial insurance. IV gives the perceived magnitude of expected price movements; it is not directional.”

“Trading when credits are higher also means common losses tend to be larger (as a dollar amount), but the exposure to outlier risk actually tends to be lower when IV is elevated compared to when it's closer to equilibrium. This may seem counterintuitive: If market uncertainty is elevated and there is higher perceived risk, wouldn't short premium strategies carry more outlier risk? Although moves in the underlying tend to be more dramatic when IV is high, the expected range adjusts to account for the new volatility almost immediately, which in many cases reduces the risk of an outlier loss.”~ The Unlucky Investor's Guide to Options Trading, by Julia Spina

Selling Options VS Buying Options

“Buying options for profit is like playing the slot machines. Gamblers who play enough times may hit the jackpot and receive a huge payout. However, despite the potential payouts, most players average a loss in the long run because they are taking small losses the majority of the time. Investors who buy options are betting on large, often directional moves in the underlying asset. Those assumptions may be correct and yield significant profits occasionally, but underlying prices ultimately stay within their expected ranges most of the time. This results in small, frequent losses on unused contracts and an average loss over time.”

“Selling Options for profit is like owning the slot machines. Casino owners have the long-run statistical advantage for every game, an edge particularly high for slots. Owners may occasionally pay out large jackpots, but as long as people play enough and the payouts are manageable, they are compensated for taking on this risk with nearly guaranteed profit in the long term. Similarly, because short options carry tail risk but provide small, consistent profits from implied volatility (IV) overstatement, then they should average a profit in the long run if risk is managed appropriately.”~ The Unlucky Investor's Guide to Options Trading, by Julia Spina

The Strategy

When it comes to strategy, this book typically focuses on directionally neutral strategies, such as a short strangle. Based on what I’ve learned from this book, the ideal options trade would be:

Selling a 45 Days To Expiration (DTE) Strangle, at 16 Delta, on a highly liquid index while the Implied Volatility is elevated. Then manage the trade at 21 DTE.

“As volatility reverts back to a long-term value following significant deviations, it is more valid to make directional assumptions on IV once it’s inflated rather than directional assumptions around equity prices. This book, therefore, typically focuses on directionally neutral strategies, such as the short strangle, because these types of positions profit from changes in volatility and time, and are relatively insensitive to price changes. However, that is a personal choice.”~ The Unlucky Investor's Guide to Options Trading, by Julia Spina

My Thoughts on The Unlucky Investor’s Guide to Options Trading Book

I think this is my new favorite Options trading book. It’s a quick read, not overly reliant on complex equations, and it gives some really useful trading strategies that every options trader should understand. In my personal options account, I dedicate 20% of my BPR to this strategy that I call the TastyTrade strategy, which is the 18-delta, 45DTE Strangle. I do this trade on a few different underlyings when they have a high IV Rank. 

Continue reading my review and summary here: https://kriminiltrading.com/blogs/mus...

[Suhel Banerjee · Rating 4 out of 5]

Caveat: I am a fan, no two ways about it, of the Tasty network and the gold standard programming of the network. Like listen to it every day level of fan.

In The Unlucky Investor's Guide to Options Trading, author Julia Spina demystifies the world of options trading, guiding readers through the intricacies of options contracts, trading strategies, and risk management techniques. She emphasizes the importance of understanding the fundamentals, developing a sound strategy, and meticulously managing risk to achieve sustainable trading success.

Like one of my fav. Tasty segments - From Theory To Practice by Dr. Jim, Julia does a thorough job of explaining why playing short options just loads the odds in your favor and she goes into the intricacies of building a comprehensive short options portfolio.

Options selling is often compared to extreme gambling. This book (and the Tasty network) have thousands of hours of research to prove that if you don't think of options as a get rich quick scheme, it's one of the few financial investments where you can statistically tailor the game in your favor by making sound decisions.

If you're anything between an intermediate to advanced options trader, this is a must read. (May not be the most recommended first book if you're a true novice).

[Bob S. · Rating 5 out of 5]

A good and detailed explanation of the "tastytrade" philosophy for trading options, most notably around selling short strangles. There is certainly more detail covered, including portfolio management and brief introductions including some of the math behind options. I would say this book is for those who already have a familiarity with options and is not for complete beginners. I would recommend it for anyone interested in learning more about selling options for premium.

[Ani Emmadi · Rating 4 out of 5]

Really good refresher on best practices for trading short options.

I don't recommend this book for complete beginners as there are a lot of assumptions made on the reader's experience level. If you are someone who understands the basics of options, made few option trades (long and short) before, this book will provide immense value.

[Vincenzo · Rating 3 out of 5]

It is an interesting entry level book for options. This book condenses the information that can be found between the videos and the information available on the Tasty work website.
However, the book has the merit of introducing the necessary statistics and mathematics in an easily accessible format

[Jeff Carpenter · Rating 4 out of 5]

I’m not looking to trade options, but I did want to better understand Black Scholes and the Greeks and this book definitely delivered. The explanations were clear and I appreciated the amount of data used to back up points.

[Todd C · Rating 2 out of 5]

Listened to the audiobook...not recommended. I'm super green when it comes to options but this book is far more in depth than anticipated. It's probably great for those who have more than a basic knowledge of options but for beginners who have never traded its a bit much.

[Suhrob · Rating 4 out of 5]

This is a clearly written good intro to short premium strategies. Covers a lot of ground with decent detail.

Though be not mistaken - this is very much intro stuff. It is a book about short vol but try to find "vega" in it.

[Claudius · Rating 5 out of 5]

By far the best introduction to mathematically based options trading. Complete with conceptual explanations and mathematical explanations this book is a comprehensive introduction to the topic and will likely make you better and more mechanical than 90% of other traders.

[Mauricio Hernández · Rating 5 out of 5]

I've read a fair amount of books on options trading and by far this is the most comprehensive one with backtests and actionable advise. Highly recommended!

[Amanda · Rating 5 out of 5]

A lot of useful information packed into a short book. I will definitely read this again!

[Kevin A. · Rating 5 out of 5]

The most research driven approach you'll find on options trading

[Anna · Rating 5 out of 5]

A great book to learn about options trading.

[qqbear]

Went in too deep. This was way beyond my reading level.

[Kamal Laungani]

Dropped on between. Too basic and too many strategies

[Spencer · Rating 2 out of 5]

Very math heavy, very dry, and not focused as well as they can on actionable strategies.

Still, some nuggets of good ideas, but hard to get at them.

[Alex Barrett · Rating 3 out of 5]

The sections on how to build a core portfolio, how large positions should be and how much of your buying power you should use are useful. Basically everything else in the book is a waste of head space and understanding the presented concepts will not make you any money. You are much better off watching videos from Tastytrade, however some concepts in this book I have not found in other Tastytrade material, it is worth purchasing this book and reading.

[Alejandro Yepes · Rating 5 out of 5]

Awesome book for anyone with options knowledge looking to learn more. It is dense in mathematical and statistical concepts making it awesome for all mathematician readers. The book has amazing strategy, completely proven and backtested. 100% recommend.

[Tomasz Kurpanik · Rating 5 out of 5]

superb book

Julia knows her stuff. Get it immediately. Packed with practical knowledge backed by years of back testing. That’s exactly what you need for your option trading.