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

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 hightlights Optionvue'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.

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.

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 Endgame and 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.

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.

Certainly, this book is masterfully written, but that's just it--for what type of audience? The endless barrage of statistical data and college textbook footnoting did not aid in answering the crucial questions I had when I bought the book for my Kindle Fire--i.e. What system can I use to successfully day trade stock options, how do I assess the best stock candidates for such trading, and what typical profits can I expect if I use the "system" correctly? This work is way too scholarly for even a knowledgeable stock option trader, and certainly, it is definitely not for a beginning options trader.

This book is a must read for anyone trading options. It the best source on how to trade options in brief time frames. Augen explains the theory for the behavior of options and how to profit from price distortions. The book emphasizes the importance of minimizing exposure to the market by taking brief time frame trades that can be very profitable. The book clearly discusses the importance of understanding and correctly interpreting volatilating in option trading. The importance of using standard deviation calculations for evaluating price changes and for comparing stocks is essential. The book also presents practical trades that can be structured on a regular basis to take advantage of the price distortions in brief time frames. This book is a must for the option trader. This was the first Augen book that I read and I got so much out of it that I have now read all of his books. This author is the best source on this topic and his work on option expiration trading is the only major work on this subject. I rate this 5 stars because it is an outstanding resource for understanding option trading and since it also gives very practical methods to stucture profitable trades. A great read.

I have 38 years in the securities industry and have two books in print myself. This one is worth ZERO. Loaded with charts which are near impossible to comprehend. You learn near nothing - total waste of money !!

Options are not easy at all. Wisely the author does not make it easy either, and the book gives some hard time to a reader. Instead of simple strategies and directional guesswork in turbulent markets the author proposes serious work based on mathematics and deep understanding the subject. The book argues for solid systemic risk/reward calculations, experimentation, model fine tuning and your own efforts. The book also gives crucial background information on price dynamics in current markets and warns about numerous pitfalls and common oversimplifications. Using some mathematics and spreadsheet programming you can get test models and simulations working to begin with. The book leaves the final work to the readers because in the market the investor and trader oneself must be responsible. It does not make it easy for novices but author's earlier books follow the same pattern of thinking and they are of great help on the way. Especially clearly we can learn how to approach the central and difficult factor of implied volatility. You have to invest your time to get into this multidimensional problematic. The book is about very brief time frames which may cut down the interested audience but the same models work in any time frame. The book is an important contribution to investor community and it is a must reading for anybody serious about stocks or options.

This book is good for you if you have an interest in how option price volatility evolve over a short time-frame. The distortion the author mentioned is kind of hard for retail to take full advantage. Things like volatility surface analysis is something you have to put the work to really find opportunities. Overall it's a good book with interesting knowledge on the subject.

Very good if you can stomach it and the highs and lows and dangers of options trading, Not good for long term trading.

Most of the time I can grap few things or tips in a book here it is not the case. It is to me not correlate to the reality. It is pure mathematics modeling no in phase with the real day trading world in 2014. Ms

The concept of differences in historical and implied volatilities computed on over night close to open , intraday open to close and daily close to close , and charting intraday price spikes in terms of standard deviations of volatility & their possible use to be put to good use in understanding options pricing for strategies is the theme. But the book makes heavy weather of conveying this with pages & pages of narrative . Misses the focus on leveraging these for profitable trades except in passing . The author could have cut down on length with better of mathematical equations and graphs . In summary the book doesn’t repay the effort in reading it adequately

Worst book ever