Book Review: Binary Options by Hamish Raw

The problem with finding a good a book on binary trading is the outright shortage of any such books at all. There are only two pieces published by major companies available on Amazon. One of them is Binary Options: Fixed odds financial bets by Hamish Raw. It is the best-selling binary options book on Amazon and has the most reviews (two!) in the niche there.

Before proceeding to the actual review, there are two important notes. First, I am feeling obliged to mention that it was the Kindle version that I have read, not the hardcover one. So some of the statements made in this review may not fit the other version of the book. Second, I have almost no background in vanilla options trading, while this book seems to rely somewhat on basic knowledge of conventional calls & puts and their properties, so my judgement will be biased towards the opinion of a complete newbie.

By reading Binary Options by Hamish Raw you will learn the following:

• What binary option is and how they work. This is by far the easiest part of the book and is delivered pretty well. Even a complete beginner will be able to grasp the concept of the profitability model and learn the two basic types — upbet and downbet.
• What theta (time decay of the option price) is and how does it work with binary options. It is a more complex concept and, except for the exact formulas, is explained quite simply here.
• What volatility and vega are and how they works with upbets and downbets. Things are starting to get rough here, but vega is one of the greeks you want to know more about in order to profit from the price volatility (or the lack of it).
• What delta and gamma are and why the former is the most used greek among the binary traders. If you are not very good at math, understanding gamma would probably be somewhat tricky. The delta is not very difficult and is definitely a must-know if you want to assess the fairness of your broker’s BO returns properly.
• What rangebets are and how they are connected with conventional strangles. It is a good start if you plan to beyond the usual high/low bets. You will also find out how a rangebet can be simulated with an upbet and a downbet.
• What eachwaybets are and how they can add flexibility to the more cautions options traders by allowing not-so-strict “binarity”.
• What one-touch and no-touch bets are and their rather complex valuation model. Despite their apparent simplicity, they are very different from the more popular high/low binary option types and their derivatives.
• How to trade binaries. Including: usual betting up or down, buying and selling volatility, profiting from binary option appreciation/depreciation over time, and hedging with underlying asset, various types of conventional options and other binary options.
• Comparison of binary and conventional options. The entire book is built upon such comparison — you will learn what cases are good for binary options and where it is better to revert to the vanilla options.
• How to solve the basic binary trading problems. The book offers some exercises (with answers) after each chapter, so it is easy to check one’s progress and also get more real-life examples of what can be happening with options.

After reading that long list of goodies, you might start thinking that it is really a great book and that you can learn to trade binary options simply by reading it. Unfortunately, that is not so. Almost everything that is good about Raw’s book is spoiled by its disadvantages:

• It is difficult to read. The author is using a lot of options trading jargon, which makes some statements incomprehensible unless you know the particular terms that are never explained in this book. The content of the book is pretty complex by itself — after all, binary options is based on quite difficult math models — but it is made even more difficult by paying little attention to some of the crucial explanations, while repeating some information over and over again.
• To make things worse, there are errors in the book, like missing answers to some of the exercises, missing headings and typos.
• The book is somewhat detached from the modern online binary options trading provided by the majority of the widely advertised brokers. Most probably you will not be able to use more than a half of the offered trading techniques in your binary trading (e.g. selling binary option contracts), while there is a high chance to encounter some concepts and trading types not covered in the book (e.g. out-of-money rewards).
• This is probably the problem only of a Kindle version, but all the charts and some of the formulas are too small in this book — it is nearly impossible to read them without leaning close to the screen and there is no way to zoom in on them.
• Almost forgot about this one… If you decide to take the hardcover version of Binary Options by Hamish Raw it will cost you almost $100 or 10 times as much as the electronic version.

Of course, it is not all that bad. Hamish Raw has put up a lot of efforts to bring this book to life and, quite probably, it is really the best one available as of now. I would like to point out the following advantages:

• The book is well-structured and it is easy to find some specific topic, chart or formula when you need it for reference.
• The author provides a real scientific approach to binary options trading. Nowadays, you are to read more about some “sure-fire” trading systems and “100% success rate” strategies than find out what the greeks are and how to use them.
• Some of the author’s anecdotes inserted here and there in the book are really refreshing, albeit full of slang, amidst the complexity of the content.

Overall, I would say that the book is worth reading only if you cannot find any other good source of education (which would be another trader with a higher level of expertise). It could use a lot of improvement and, probably, the author’s next book will be that improved version of Binary Options: Fixed odds financial bets.