There are lots of books that talk about the basics of options trading. But
Trading Options at Expiration, by Jeff Augen,is one of the few books that talks about truly advanced options trading – during what is generally considered the riskiest time to trade them – the week before expiration. I have found this book as well as others by Jeff to be unique in providing advanced options insights in a clearly explained text, so I thought I’d review the book.
Jeff Augen is a seasoned options trader of the practical kind. Unlike some authors, he doesn’t take an overly academic approach to explaining how these last -minute options work -instead, he provides real data on how volatility and time melt away intraday during the last week of trading, and how options typically move overnight. This is because options must account for the non-trading (but still news-possible) time slots – nights, weekends, etc. If the options have a lot of time left until expiration these non-trading slots aren’t very important, but in the last few days these slots can represent a large percentage of the remaining time left on the option – so they can move the price. I have not found any other author who explains these topics.
Trading Options at Expiration is not a long book – clocking in at around 150 pages. But it’s chock full of both data-driven info on how options behave as well as suggestions for how to trade. The first two chapters talk about the data driving his thinking, while the 3rd and final chapter goes into thursday/friday trading at expiration. One of my conclusions from reading this book is that trading options in the last week can actually be relatively safe if you are a net seller of volatility/time and are very disciplined about your trading stops. The very factors that make it hard to buy options and profit from them at the end (stock needs to move so far so fast) make it easier to make money from the inevitable powerful forces at work on those options, as described in this book.
I highly recommend you get the bookand read it.