Trading Against the Crowd: Profiting from Fear and Greed in Stock, Futures and Options Markets

Lots of books have been written about options and related stuff like Greeks or complex strategies like "Short Iron Butterfly". This book is not about options per se. It uses options merely as a tool to predict market tops and bottoms. It uses very simple indicators like as put/call ratios and option-implied volatility. This book does not teach you about options. It assumes that you are already familiar with stocks and options market. Many books have been written about contrary opinion in regards to investing, and most famous is "Security Analysis" by Graham and Dodd. Actually, many of the original works in the area of investor sentiment are from a long-term investing perspective, and largely examine the issue through contrarian analysis of stock market fundamentals, such as intrinsic value and growth prospects. The book "Trading Against the Crowd" ignores fundamentals and instead focuses only on sentiment technicals. In addition to option put/call ratios and volatility, it relies on short sales, advisory opinion, investor surveys, and quantitative news flow. By using these sentiment measures, it is possible to identify investor sentiment extremes and associated market turning points. A unique dimension to this book is the combination of price triggers with sentiment gauges. In addition to this book, I recommend "Art of Contrary Thinking" by Humphrey B. Neill, "Crash Proof 2.0" by Peter D. Schiff and "The Only Three Questions That Count" by Ken Fisher.