Option Theory (The Wiley Finance Series)

Rating:
Summary: Option Theory Fits the Bill
Review: As an interest rate derivative trader, and MS Computational Finance graduate, I am constantly in search of new texts that combine the right amount of theory and state of the art practice. The new text by Peter James definitely fits the bill for my needs. He provides the reader with clearly written fundamentals that are used to build up to complex topics. But most importantly Mr. James has a unique talent for including great practical examples throughout his text, something lacking in many option theory texts. This text will definitely remain on my desk as a great reference tool.

Rating:
Summary: The right combination of rigor and practicality
Review: This book is not for everyone. It is not for those who just want a once-over-lightly introduction to options. But it is the perfect book for those who want to combine rigor and practicality. Unlike the many books by mathematicians who claim to be writing for a general audience but in fact are trying to impress their colleagues (mostly by being unintelligible), James writes extraordinarily clearly. But even more important, he has practical experience with all the solution techniques he describes (binomial models, differential equations, Monte Carlo), and expertly describes their uses, their limitations, and the relationships among them. Unlike many authors, he has no apparent bias towards any one of the three solution methods. He also presents numerical examples to illustrate his points. The final section of the book is mathematically more advanced, and allows the reader to ascend to a higher level of sophistication. It's clear that James wants the reader to understand. Bravo!!!

This may be the perfect book to read after mastering a superb introductory text like Robert L. McDonald, Derivatives Markets.