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Options, Futures, and Other Derivatives (9th Edition)

John C. Hull · 3 HN comments
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Amazon Summary
For graduate courses in business, economics, financial mathematics, and financial engineering; for advanced undergraduate courses with students who have good quantitative skills; and for practitioners involved in derivatives markets Practitioners refer to it as “the bible;” in the university and college marketplace it’s the best seller; and now it’s been revised and updated to cover the industry’s hottest topics and the most up-to-date material on new regulations. Options, Futures, and Other Derivatives by John C. Hull bridges the gap between theory and practice by providing a current look at the industry, a careful balance of mathematical sophistication, and an outstanding ancillary package that makes it accessible to a wide audience. Through its coverage of important topics such as the securitization and the credit crisis, the overnight indexed swap, the Black-Scholes-Merton formulas, and the way commodity prices are modeled and commodity derivatives valued, it helps students and practitioners alike keep up with the fast pace of change in today’s derivatives markets. This program provides a better teaching and learning experience—for you and your students. Here’s how: NEW! Available with a new version of DerivaGem software —including two Excel applications, the Options Calculator and the Applications Builder Bridges the gap between theory and practice —a best-selling college text, and considered “the bible” by practitioners, it provides the latest information in the industry Provides the right balance of mathematical sophistication —careful attention to mathematics and notation Offers outstanding ancillaries toround out the high quality of the teaching and learning package
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The standard text on the topic is the Hull book.

You can buy the 9th edition (I think the 10th is out) for about $100 used on Amazon:

https://www.amazon.com/Options-Futures-Other-Derivatives-9th...

This one was recommended by the former head of NYMEX to me when I started my career in trading. Written about Jesse Livermore who made and lost his fortune multiple times. He was often blamed for rigging the market, but his lesson is simple: you basically can't rig the market; it will destroy you way more easily. Take what the market gives you and be happy it even decided to give you that:

https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Opera...

And you'll see a lot of recommendations for everything from Hazlitt to Piketty, but my favorite you never see recommended for macro is The Way the World Works by Jude Wanniski. He was one of the life long Democrats who became a Reagan advisor (and basically quickly turned back into a Dem before passing away about ten years ago):

https://www.amazon.com/Way-World-Works-Gateway-Contemporary/...

Besides that, this is a really broad questions. There is stuff like John Hull for derivatives (this is what I survive on):

https://www.amazon.com/dp/0133456315\

This is the game theory book I and many others have survived on in college and many years past. Haven't really found a better one yet:

https://www.amazon.com/Game-Theory-Press-Drew-Fudenberg/dp/0...

15155
Good call on the Hull recommendation - How do you feel about Natenberg's Option Volatility and Pricing?

What do you trade, out of curiosity?

(Career software engineer and fledgling options trader here, these were recommended to me when I first started learning. Still looking to make an industry change.)

jnordwick
For options the other two that I've read and liked are Sinclair and McMillian:

https://www.amazon.com/gp/product/0470181990/

https://www.amazon.com/Options-Strategic-Investment-Lawrence...

totalZero
To chime in...

Natenberg is solid, IMO better than Hull.

There are some nuances in pricing that will not really be captured in either book. For example, you don't learn that the implied vol of a one-week deep-in-the-money call should be lower than the same-strike put vol in cases where you have a dividend going ex the day before earnings. You will likely exercise the call before earnings to capture the dividend, so you shouldn't price in theta (or, from another angle, variance) for the event. And the thing is, every good options trader views these nuances differently.

All you really need to know about options pricing is: Greeks to understand the risk, skew/kurtosis/etc to understand the limitations of Black Scholes, and how to make sure your inputs are reliable so you can think critically about what constitutes a "fair" price.

To build past those basics, you have to take some kind of view on the name/sector/market. Understanding the product is mainly a means to an end---that end, of course, being an elegant way to express your views about the market.

Among the options you listed, long term put option on QQQ appears to be the best fit for your objectives.

Fidelity charges $7.95 per trade plus $0.75 per contract. More info on fees at https://www.fidelity.com/trading/commissions-margin-rates.

When you first start Option trading, you will likely need to call to get approval from the brokerage for options trading. Most brokerages will also provide you an Option Risk guide similar to this http://www.optionsclearing.com/about/publications/character-....

If you are new to Options, I will suggest doing some research and reading online to familiarize yourself. If you are further interested in learning theory and mathematics of Options, a good introductory text is "Options, Futures, and Other Derivatives" by John Hull http://www.amazon.com/Options-Futures-Other-Derivatives-9th/...

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