Day Trading Options: Profiting from Price Distortions in Very Brief Time Frames 1st Edition

Users of Optionvue should take note of this book. Although Optionvue is limited modeling the most important concept in this book --graphing stock movement as standard deviations, users can nonetheless grasp concepts about trading implied volatility that are beyond the scope of the remainder any of the books on Volatility and Optionvue's own basic tutorials.What distinguishes this book from all the rest is an explanation of situations where volatility trades can be profitable, techniques that are useful and the entry and exit points. Careful reading also makes condors and butterflies less attractive when the number of average volatility spikes for stocks greater than 2 and 3 standard deviations does not vary much between low and high volatility stocks in the same time frame. The information also hightlightsOptionvue's inability to visualize important information about volatility. Chapter 4: Working with Intraday Price Charts is totally beyond the capability of Optionvue modeling. This chapter introduces a new charting tool which models price change in the context of volatility. FASTMONEY commentators often state that a stock's option has a $5.00 move priced in. This book explains the concept of graphing stock price change over any period of time as a standard deviation, not as price change or percentage. Chapter 5 discusses special events that can be traded and the usefulness of graphing stock price as a standard deviation.In summary, to the informed this small book is a great tutorial by a great teacher. The concepts are both original and based on years of experience as a trader. It makes the case for short term trading, but more importantly explains the best way to profit from volatility. This book is 168 pages. Good things, when short, are twice as good.

Undeniably, this is the most densest book in a series of books by Augen that includes Trading Options at Expiration: Strategies and Models for Winning the Endgameand The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets and a workbook. This book is also perhaps the most targeted one and is unlikely to appeal to a broader audience.The book in itself is fairly short (written with the gravity similar to academic journals) and has five chapters. The first chapter, though called "basic concepts" really sets the tone for the book and makes it evident that the intended audience is experienced day traders (true to the book title's implication). The chapter provides a very informed analysis of how options market (pricing) has changed in the recent crises, with specific focus on implied volatility swings and volatility skews across strike prices. The second chapter discusses automated trading and emerging trends in that field. Unless the reader uses sophisticated trading systems and is very familiar with programmed trading, the chapter is not likely to sustain significant interest, but the reader is well-advised to force yourself through the chapter. Using various detailed examples, Augen demonstrates the role of statistical analyses in trend exploitation, issues of "over fitting" indicators and volatility distortions. The third chapter (forming bulk of the book) deals with volatility distortions and how to trade them. The discussion is however based on 3-dimensional maps (implied volatility, calendar information and price) and is not really clear how accessible such tools are. Using various examples, Augen demonstrates approaches involving selling time decay and backspreads. The fourth chapter introduces a new charting tool with the premise that the principal goal of an option trader is to "arbitrage differences between implied and fair volatilities". Accessibility of the tools required and even suitability of these methods for the most aggressive casual trader (once whose primary job is not trading) is not clear here either. In the last chapter (perhaps, a neat set up for the next book?) Augen discusses special events focusing on only two - long weekends and associated price distortions and events surrounding markets "digesting" large amounts of news.Overall, the book does absolute justice to its title - it is indeed targeting distortions for "very brief" (read minutes, mostly) and is fairly dense even for the experienced option trader. After having read all the books from the author in this field, the book on trading options near expiration was a far useful one for a broader audience in at least highlighting significant mechanics associated with expiration pricing dynamics and potential trade constructs. This book, Augen's dedicated focus on day trading, doesn't even pretend to be suitable for anyone but a niche audience. Augen does provide some interesting insights that will benefit any serious options trader, but this time, the book is perhaps a little too far out except for the very experienced and fanatic fans of Augen.

For those who understand math this is a good book. For the rest of us, there are a few helpful pieces of information but it's a hard read unless you REALLY enjoy math and want to understand your edge with options by doing the math.

Volatility trading is an elusive subject with few practical texts. Retired floor trader techniques usually don't work well for retail traders and the available books on volatility are theoretical lacking practicality. Augen's book should really be considered a textbook written from the perspective of an active retail trader who thoroughly understands volatility and trades volatility both long and short. This book argues subtly but powerfully against time decay strategies such as condors and butterflies. Too often volatility spoils these trades. Augen's book presents concrete examples of price anomalies and market distortions where volatility yields profitable trades in short periods of time. The book describes real trades and discusses the theoretical underpinnings. The information is put into perspective with discussion of volatility with nuance and texture absent in other books. To capitalize on this short book requires copious note taking, case based reasoning and modeling software to visualize both the many concepts and the risks associated with placing and maintaining the positions. This book is not intended for a passive reader. It is most rewarding to those who are knowledgeable about option theory, and option trading experience. The option strategies that are described in detail in this book are rarely or only briefly mentioned in passing elsewhere, and include ratio backspreads among others. One of the most compelling concepts is modeling price movement in terms of volatility, i.e. as standard deviations. . This book affirms Augen as the ultimate preceptor in Option Volatility.