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

"Day Trading Options-Profiting From Price Distortion in Very Brief Time Frames" is not an easy read. Author Jeff Augen takes the reader through a very detailed analysis of option pricing, and some of the anomalies that occur. Early on he debunks the theory of trend analysis and charting, proving over many varied time frames and specific stocks, even using a random number generated analysis, clearly displaying that what happened a minute ago has no bearing on what will happen this minute, and this minute in trading has no bearing on the next.He clearly explains the age of super computers completeing millions of calculations per second to find minute anomalies in the myriad market places, and instantly trading on these disparities, faster than the average trader could even discover them, never mind attempting to make a trade with our PC.But wait, there's more. In the later chapters he delves deeply into the statistical side of option trading, including standard deviations, implied volitility, and other areas of deep mathematical analysis.This book is not an easy read, and even though I am basically familiar with statistical analysis and measuring deviations, there were times, even after reading and re-reading a section several times, I just had to move on. If I had a major concern, it would be the charts and tables do not explain what they are trying to demonstrate clearly enough. The author takes a lot for granted when it comes to a readers ability to decipher the point he is trying to make. If the salient points were highlighted, this would be a significant improvement.Overall, this is a very challenging book, and in my opinion written at a level for the sophisticated option trader. I would not recommend this book to the beginner or even average option trader. But if one is attempting to grow beyond even the above average option trader, and is working to learn all he/she can about trading, then this book belongs in their library.

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.

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.

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

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

Nachdem mir ein vorhergehendes Buch des Autors (siehe [1]) trotz methodischer Bedenken ganz gut gefallen hat, habe ich mir auch dieses zugelegt. Auf amazon.com wird es als das beste und tiefsinnigste J.Augen Buch gefeiert. Entweder haben diese Rezensenten oder ich ein anderes Buch gelesen. Bei hochwertigen Grüntee ist der zweite Aufguss oft besser als der erste. In diesem Fall schmeckt der Aufguss nur schal. Augen hat nur eine schlechte neue Idee. In [1] berechnet er auf Basis von Daily-Data Return-Spikes. Die Spikes werden mit der Volatilität der vorhergehenden 20 Tage normiert. Er wendet nun diese Methode 1:1 auf High-Frequency (1min) Daten an. Ohne sich zu fragen ob das überhaupt geht. Stillschweigend geht er mit dieser Methode von einer Brown'schen Bewegung aus. Es folgen auch daily-data keiner Brown'schen Bewegung. Aber in diesem Fall kann man noch argumentieren "Alle Modelle sind falsch, manche sind jedoch nützlich".Auf High-Frequency Ebene ist das Model jedoch nur mehr falsch. Es ist bekannt, dass es auf dieser Zeitebene eine bereits stark ausgepräge Poisson vulgo Jump-Komponente gibt. Augen erhält dementsprechend auch spektakuläre Spikes. Die Händler wissen das auch. Die Optionenpreise hüpfen daher nicht ständig mit. Es werden die Spikes geglättet. Insofern kann man noch so schöne Spikes finden. Sie existieren nur im Auge des statistisch unbedarften Betrachters.Beim vorigen Buch habe ich mir überlegt, ob ich 4 oder 5 Sterne geben soll. Ein Münzwurf hat sich für 4 entschieden. Diesmal war die Auswahl zwischen 1 und 2 Sternen. Die Münze hatte Mitleid.[1] "Der Daten Stachanow" Besprechung von J.Augen: Volatility Edge in Options Trading.