Book Reviews, Value Investing, Videos

Five Good Questions: Erik Kobayashi-Solomon – The Intelligent Options Investor

Erik Kobayashi-Solomon is a 20-year veteran of investment banking, hedge funds, and third-party analysis industry.  He is also the co-founder of IOI Investor Services, LLC, a company that helps institutional and individual investors close the gap between their investment responsibility and their skill set. His book, The Intelligent Option Investor, was published by McGraw-Hill as a well-regarded contribution to the value investing community.

Erik Kobayashi-Solomon – The Intelligent Options Investor

Audio Podcast:

Five Good Questions:

  • Many value investors may feel like options are dangerous, I know I did.  Why was I wrong to be fearful and how can options be a useful tool for an investor?
  • Assuming your analysis leads you to believe a company is undervalued, why might options be better expression than just buying and holding?  What about the element of timing that options introduce?
  • If you don’t believe in the Efficient Market Hypothesis, why should you be especially attracted to options investing?
  • What is delta, and what can it tell us about Mr. Market?
  • What are LEAPS and are they a good first step for a traditional value investor to dip their toe in the options water?  How would address the concern that an investor might feel about getting comfortable with the relative trade-offs of premium price vs. tenor and strike price?

Erik’s Book Recommendation:

The Lessons of History by Will Durant, Ariel Durant

Erik Kobayashi-Solomon - The Intelligent Option Investor

The Intelligent Option Investor: Applying Value Investing to the World of Options by Erik Kobayashi-Solomon

Erik Kobayashi-Solomon – The Intelligent Option Investor – Description


If you’re a value investor who wants to get your money into the lucrative options market, forget about day trading, chart patterns, and market timing. This systematic book lays out a path to long-term wealth by taking positions on companies with real intrinsic value–the kind Ben Graham and Warren Buffett would invest in.

Leave the complex algorithms and “Greeks” for the floor traders. Erik Kobayashi-Solomon, former investment banker, hedge fund risk manager, and valuation consultant to the World Bank, gives you the knowledge and sophistication to understand what options pricing reveals about the market’s estimation of future stock prices. He then demonstrates how to find tremendous opportunity for low-risk, high-profit investments in the difference between the market’s mechanized price ranges and ones made by you, a thoughtful human being armed with the insight this book offers.

Everything you need to make options a powerful contributor to your portfolio is inside, including:

  • A thorough explanation of what options are and what their prices can tell you about the market’s expectations for the future price of a stock
  • A proven way to envision the risk/reward trade-off for stocks and options and a straightforward method to use the flexibility and directionality of options to tilt the risk/return balance in your favor
  • A robust and intuitive framework for assessing the value of a company
  • Strategies to avoid the most common behavioral pitfalls
  • Tips for using the information on an option-pricing screen
  • Thorough coverage of important option investment strategies, including “covered calls,” “protective puts,” and “collars”

Regardless of your experience level with options, this versatile guide makes you a better investor. Beginners get a turnkey solution to growing wealth in options, experienced investors gain savvy guidance for fine-tuning their practices, and professional investors learn how to effectively incorporate options into a portfolio.

Understanding valuation in this perceptive light lets you earn the consistent profits of The Intelligent Option Investor.

The Intelligent Option Investor is the hands-on guide to using a cutting-edge valuation framework in the fast-paced options market to boost growth, protect gains, and generate income.

It explains how to use your insightful human mind to recognize when mechanized options pricing undervalues a stock. Once you see an opportunity, you’ll have all the tools you need to execute a fact-based decision about how and when to invest in the company.

Have your money make the most for you with the potent blend of time-honored value investing strategies and hot options vehicles in The Intelligent Option Investor.


The Intelligent Option Investor reflects Erik’s keen understanding of how companies create value for their owners, which is essential to successful option investing. In addition to showcasing Erik’s expertise in developing option investment strategies based on fundamental security analysis and a long-term time horizon, this book delivers the information in a way that’s accessible to individual investors, offering them the resources to use options to help them meet their financial goals.” — JOE MANSUETO, founder, chairman, and CEO, Morningstar, Inc.

“Erik knows–and lays out here–that to use options successfully, you need to understand the underlying stock and its valuation first. This is one of few books on options that teaches this fruitful, combined approach. And that’s why it works.” — JEFF FISCHER, advisor, Motley Fool Options