Mcmillan Options As A Strategic Investment __full__ -
1. Introduction & Overview Options as a Strategic Investment by Lawrence G. McMillan is widely regarded as the bible of options trading . First published in 1980 and now in its fifth edition (2012), the book has stood the test of time, evolving alongside the options market while maintaining its core philosophy: options are not just speculative instruments but powerful tools for risk management, income generation, and strategic portfolio enhancement.
However, the fifth edition includes updates on ETFs, weekly options, and volatility products (VIX, VIX futures). | Book | Focus | Best for | |------|-------|-----------| | McMillan | Practical strategies + volatility + risk management | Serious traders, portfolio managers | | Natenberg (Option Volatility & Pricing) | Theoretical pricing, Greeks, professional market-making | Quants, market makers | | Hull (Options, Futures, etc.) | Academic, mathematical | University students, financial engineers | | CBOE Course | Basic to intermediate mechanics | Beginners | mcmillan options as a strategic investment
| Criticism | Explanation | |-----------|-------------| | | Over 1,000 pages; can overwhelm beginners. | | Pre-2008 examples | Some examples lack ultra-low interest rates or zero-commission environment. | | Limited algorithmic focus | Little on automated trading or high-frequency strategies. | | No digital resources | Unlike newer books, no companion website or live data files. | First published in 1980 and now in its
| Rule | Application | |------|--------------| | | 1-2% of total capital for directional; 0.5% for premium selling | | Never sell naked options | Exception: Very experienced traders with deep margin and stops | | Use stops on stock legs | Not on options (too volatile); instead, stop on underlying price | | Position sizing | Scale into volatility sells; never full size initially | | Correlation risk | Avoid selling premium on multiple highly correlated underlyings | | | Pre-2008 examples | Some examples lack