Your Options Handbook: The Practical Reference and Strategy Guide to Trading Options

By Jared A. Levy

Overview

Published in 2011 by Wiley as part of the Wiley Trading series, "Your Options Handbook" provides a practical, action-oriented guide to options trading. Jared A. Levy, an experienced options trader and market commentator, focuses on helping traders develop the judgment needed to select and manage options strategies in real market conditions.

Key Themes and Arguments

Market Mechanics

The book covers the operational aspects of options trading including order types, margin requirements, exercise and assignment procedures, and the role of the Options Clearing Corporation. This practical foundation helps traders avoid the operational mistakes that can undermine otherwise sound strategies.

Strategy Selection Framework

Levy organizes options strategies around the trader's market outlook (bullish, bearish, neutral, volatile) and risk tolerance. For each market view, he presents a range of appropriate strategies from simple to complex, explaining the trade-offs between risk, reward, and probability of profit.

The Greeks in Practice

Rather than treating the Greeks (delta, gamma, theta, vega) as abstract mathematical concepts, Levy explains how they function as practical risk management tools. He demonstrates how to use the Greeks to monitor position risk, plan adjustments, and construct portfolios with specific risk characteristics.

Volatility Analysis

The book provides practical guidance on analyzing implied volatility, understanding volatility skew, and incorporating volatility forecasts into strategy selection. Levy explains when to be a net buyer versus a net seller of volatility based on market conditions.

Trade Management

A distinguishing feature is the emphasis on trade management decisions after entry: when and how to adjust positions, when to take profits or cut losses, and how to roll positions forward. This post-entry management is often the most challenging aspect of options trading and is underserved in most options texts.

Significance

The book's practical orientation makes it a valuable companion to more theoretical options references like McMillan's work. Its focus on decision-making and trade management addresses the aspects of options trading that are most difficult to learn from textbooks alone.