[trader220]

I know Rich and his Father from the exchange floor and both his and MRM's conclusions are spot on.

The "Quant's" as they are known in the financial circles all play on the same field as Rich noted, the big difference is they are playing an entirely different game. Agreeing with Rich again, they actually make the markets more efficient and therefore hand that benefit free of charge to the public. Since you’re an end user and not a liquidity adder these are boom times for end users.

330, the title makes it a book I would never pick up. The content may be worthwhile but since I have not read it I can’t say. There are no magic formulas and I suspect the guy who wrote it outlines four variations on some common strategies which are probably sound strategies.

Agreeing with Rich yet again, the Natenberg book is sort of the bible. Larry McMillan’s Options as a Strategic Investment, used to be the only bible until Natenberg’s book supplanted it. Either one of those books are a difficult and lengthy read, filled with equations which are worth mastering if you’re going to be very serious. On the other hand all of the mathematical mastery of options has been priced out of the market from an individual investor’s standpoint. The concept of implied volatility vs. historical volatility is still extremely relevant.

Without spending the time to get too deep, think of the price of an option as a cube, each of the six sides represents one of the variables. Some are subject to a great deal of fluctuation other are not, and some have a great impact on the price of the options and others much less. In the end anytime one of those six variables changes in order for the price or “fair value” of that option to remain true the cube must be intact. Therefore the rest of the variables are affected, it just depends which you’re solving for. Typically the individual investor only cares about the value of the options where as the quant’s are looking to take advantage of one of the six variables. (Time, implied volatility, interest rates, strike, put/call and dividend stream). There are endless strategies to profit from changes in the other variables which are not static.

Rich, my Lindsey's are being shipped on Monday... Stop over to my office if you have time the following week.