Julia Spina - The Unlucky Investor's Guide to Options Trading

When we started tastytrade, our proving ground was an old hip‐hop studio in downtown Chicago. It was a third‐floor walk‐up with a piano as the receptionist's desk and a drum set in the middle of the living room. Old album covers and broken musical instruments were everywhere, yet the energy was undeniable. Our research team consisted of a Guitar Hero champion in a hot dog suit, a few interns, and an ex‐market maker. Our mentor was a sports shock jock whose claim to fame was having sex on the 50‐yard line at Soldier Field, and to top it all off, we had hired a bunch of random comedians from Chicago's famed Second City. Thank God we knew how to trade because we had no clue how to do media. Even worse, I will never forget the day we decided to do HD quality video. I thought, “No way is that what I look like.” That's why tastytrade is so awesome because we figured out a totally new model of financial media when the odds were against us.

Lucky investors never figure things out because they never have to: They simply follow the herd and hope for the best. We refused to follow traditional financial media down the path of self‐promotion and financial irrelevance. We found smart people, fed them cheap lunches, made them work crazy hours, gave them free snacks, and mostly let them do their own thing. The result? We changed the world of strategic investing.

We knew early on that a book about options trading would add a new layer to our model of engagement and be a powerful tool for creating financial content. Eighteen years ago, I locked myself in our old conference room with one of our cofounders, and we tried to write a book. We hired a professional writer, cleared our schedules, and made the book a priority. Three days later and one and half pages in, we fired the writer and quit the book project to protect our friendship and the future of our firm. Fast forward to early 2021, and I was again bitten by the book bug, but this time, I knew I wasn't up to the task. I asked, as nicely as I am capable of, for two of our young, smart researchers to help. I said, “It's all yours.” Julia and Anton accepted the challenge, and they totally nailed it. I truly believe this is the most logical, informative, and comprehensive book on strategic options trading ever compiled. Unlucky investors can rejoice. No book will ever be a one‐size‐fits‐all holy grail for options trading, but The Unlucky Investor's Guide to Options Trading is the closest thing we have.

Tom Sosnoff

If the conditions are just right, extraordinary things happen when many individual pieces come together: Water molecules organize and form snowflakes; Cells arrange and create organs; Jet streams combine and cause tornadoes; Grains of sand rally and produce avalanches; Investors panic sell and induce financial crashes. Complex systems are composed of many interacting parts, and emergence occurs when these parts organize to create collective phenomena that no one part is capable of creating alone. Complex systems can be found in nearly every discipline, and the mathematics describing emergent properties is not only fascinating but indicates fundamental similarities between seemingly unrelated complex systems. The extinction of a species of fly due to an invasive species of frog has really nothing to do with financial markets, yet the dynamics of the fly population undergoing ecological collapse look nearly indistinguishable from that of a stock undergoing economic collapse. Many physicists gravitate toward finance because physical systems and financial systems can be analyzed with similar theoretical, statistical, and computational tools. It was my interest in those mathematical connections that drew me to finance initially. However, after placing my first trade at the start of the 2020 crash, I quickly learned the importance of financial intuition as well, particularly when trading options.

A trader's intuition comes from experience, but a trader can more efficiently build that intuition by supplementing market engagement with some basic trading philosophies. Many of the papers, books, and blogs I read as a new options trader offered detailed coverage of options theory and its mathematics, but I never encountered a resource that explicitly laid out the most essential elements of practical strategy development. Without a system of core trading principles, applying financial theory, interpreting and analyzing data, and cultivating any sense of market intuition was challenging. However, once a foundation of options trading fundamentals was in place, overcoming the options learning curve became a considerably more manageable process. In my personal case, this foundation developed from conversations with my coworkers at tastytrade (most of which were debates with Anton Kulikov), watching options markets regularly, using options data and theory to build actionable strategies, and a lot of trial and error. My goal in writing this book is to help new traders build their own intuitions more effectively by breaking down the philosophies that formed the basis for my own, beginning with a bit of math and market theory and building from there. Nothing substitutes for experience, and investors' first options trade will likely teach them more than any book. However, it's my hope this framework that Anton and I organized will allow new traders to enter the options market with confidence and gain meaningful value from their first trading experiences, in both the monetary and educational senses.

Julia Spina

This world is full of uncertainties, but I'm fairly certain this project would have ended in disaster without the hard work of some very talented people. First and foremost, this book would not have been possible without Tom Sosnoff. Tom originally proposed the project and has wholeheartedly supported my work and opinions throughout this entire process. He is a great boss and never short of awesome restaurant recommendations. The primary editor, Erika Cohen, has not only been highly competent but also wonderful to work with. Involved since the beginning, she played a huge role organizing our ideas, and her insights greatly enhanced the readability and accessibility of the material. I wish only the best for her and her family. The technical editor, Jacob Perlman, has also been crucial in this book's development. His work at tastytrade years ago laid the groundwork for many of the ideas presented in this book, and it continues to inspire retail traders to this day. His mathematical expertise has improved the accuracy and presentation of the technical concepts covered, and I cannot speak more highly of his abilities.

On the publishing front, Jeff Joseph has been instrumental in transforming our series of drafts into a proper book. He has been immensely helpful in organizing the logistics of the publication process, offering creative advice, and establishing our relationship with Wiley. This book would not have been possible without everyone on the highly skilled editorial team at Wiley, who have all put an exceptional amount of effort into this book. Many people have contributed to the project throughout this process, but those I have collaborated with most closely include Bill Falloon, Purvi Patel, Manikandan Kuppan, Susan Cerra, and Samantha Wu. I'd also like to acknowledge the artistic contributions of Cassie Scroggins, who did a fantastic job designing the cover.

I am also grateful for the content advice from Thomas Preston, who never shied away from my many phone calls, and the writing advice from Vonetta Logan. It should be noted that everyone at tastytrade, especially the research team, has directly or indirectly had a hand in making this book possible. The ideas presented in this book were not built from scratch but rather the successes and failures of all the talented content creators at tastytrade over many years of collaboration.