Getting Started in Advanced Options, Illustrated Edition
$31.62
| Author(s) | |
|---|---|
| Format |
|
| Pages |
306 |
| Published Date |
2014 |
In Getting Started in Advanced Options, Illustrated Edition, bestselling author Michael C. Thomsett uses nontechnical, easy-to-follow language to demystify the options markets, distinguishing the imagined risks from the real ones and arming investors with the facts they need to make more informed decisions. This illustrated edition includes colourful illustrations, including charts and graphs that make complex subject matter easy to understand.
Introduction:
Every investor and trader wants to combine several attributes in the stock portfolio: diversification, leverage, safety, and profitability. This is a big order. How can you create all of these elements in the same portfolio? Tradition advises that if you want profits, you have to give up safety, and that if you want to use leverage, you have to take on greater risk. In this book, these traditional problems are challenged by demonstrating how to combine the desirable attributes while managing and even eliminating the undesirable ones.
Options, once reserved for speculators and those able to tolerate high risk, have become mainstream devices for portfolio management. Many advanced option strategies can be applied so that risks are held down or even hedged entirely, while even conservative investors may create profits by combining options with stock positions.
Can options be used in a conservative manner? Yes; in fact, one of the best aspects to this market is that it can be designed to fit a range of risk tolerance profiles. The highly conservative investor may use options to reduce risk in long stock positions. On the far end of the spectrum, the speculator can continue to use options to swing trade, leverage, and seek fast profits. The range of strategies covers the entire risk spectrum.
This book presents a range of advanced strategies. It demonstrates how market volatility works as an advantage when options are properly used to profit from uncertainty. Spreads and straddles provide the means for designing an options portfolio to accomplish many goals. These include creation of a small but consistent profit potential in exchange for equally limited risk exposure.
The later chapters in the book examine some very interesting option strategies for even greater profits than those available from option trading on equities. Options on futures are very exciting; since futures are leveraged instruments already, options on futures are “leverage on leverage.” Trading options is much safer than trading directly in futures, however. Just as trading options on stocks is cheaper and often safer than trading shares directly, you can trade options on futures directly or through commodities-based exchange-traded funds (ETFs) or index funds. This market opens up many possibilities for large profits, while limiting risks to the relatively low cost of the option.
Index options are equally exciting. An index provides built-in diversification and broad exposure, in comparison to the very limited diversification available when you trade shares. The flexibility of options opens many additional possibilities, including trading not in the underlying security, but in synthetic stock positions. The use of offsetting options is low-cost or no-cost (because the cost of long options is covered by income from short options); and the synthetic position moves exactly like the underlying security. Using synthetics allows traders to benefit from changes in the security price, but without needing to place a large amount of capital at risk.
The discussion of risk itself is often left out of investment and trading books, and this is a mistake. Clearly, risks have to exist in all markets, especially in options, or there would be no opportunity for profit. In options, traders need to understand the range of risks before placing capital into strategies. Too many option traders take on greater risks than they can afford, not so much because they don’t understand risk but because they are attracted to the trade itself. You are far better off settling for smaller and more consistent profits than going for broke& and going broke. The risk discussion is always one of the most important and essential elements in any investment strategy.
A later chapter explains how taxes work on option trading. As odd as the tax code is, rules for options are among the most complicated. This chapter by no means provides a comprehensive explanation of the technical rules applied to option profits and losses; but it does highlight the major considerations every trader needs to be aware of and should discuss with a tax adviser before entering into advanced strategies.
This book is designed to provide you with all of the tools you need to master the strategic and management aspects of advanced option trading. These attributes include:
- Definitions in context. Every term is defined in the space next to the text as it is introduced. All definitions are also summarized in the Glossary at the end of the book.
- Illustrations. The book includes dozens of illustrations designed to visually summarize key points and to show how strategies play out and are applied.
- Key Points. These highlighted, brief statements provide you with the brief major points to be taken away from each section as it is presented.
- Valuable Resources. These link you to the world of options resources and provide the benefits of access to topics and features that will improve your trading capabilities.
- Examples. The text includes many examples that emphasize the points being offered, and show how strategies apply when put into trading modes.
- End-of-chapter comic summaries. Each chapter concludes with a summary of highlights in the form of a comic strip. This is meant to highlight the key points, but in an entertaining and amusing manner seldom found in books on such technical subjects. This makes the book enjoyable on a new and different level.
The purpose to this series is to help investors and traders master advanced strategies–not only to understand the techniques and steps of each, but also to develop a context for them. This means being aware of risks as well as opportunities. Advanced options as a strategic approach to portfolio management are exciting because you can design your own level of risk as a basic step in folding options into the risk-reduction strategies. Portfolio health should always be a primary goal and purpose for every investor. In spite of the long-standing reputation of options as having high risk and not being appropriate for most people, this book shows you how these amazing intangibles can be used to reduce risks while increasing profits.
Contents:
- Strategies in Volatile Markets: Uncertainty as an Advantage
- Combinations and Spreads: Creative Risk Management
- Hedges and Straddles: More Creativity
- Options for Specialized Trading: Leveraging the Technical Approach
- Options on Futures: Leveraging Your Leverage
- Trading Index Options: Playing the Broader Market
- Synthetic Positions: Tracking the Stock
- Risk: Rules of the Game
- Taxes: The Wild Card of Options Trading
- Choosing Stocks: Finding the Right Ingredients
Getting Started in Advanced Options, Illustrated Edition By Michael C. Thomsett pdf
15 reviews for Getting Started in Advanced Options, Illustrated Edition
Clear filtersOnly logged in customers who have purchased this product may leave a review.
Coen Kaur (verified owner) –
This is a simplified, easy to read book for an advanced investment instrument. Loved the fact that the author, Michael eliminated the fear factor to an advanced investment tool with comics and easy writing. I hate it when I get books that tries to ‘complexify’ investment instruments rather than simplify it.
Great introduction book to anyone interested in investing or learning how to invest. A huge plus point – Micheal devoted a chapter to explain capital investment tax gains.
Aisha Costa (verified owner) –
This book covers a good variety of more advanced option concepts for those who are already familiar with the option trading basis. The title “Getting Started” fits well as it covers the general concepts rather than in-depth details and strategies in exploiting those concepts. Some of the main topics in the book included spread strategies, hedging, straddle, synthetic positions, and tax related discussions related to option trading.
This book also comes with a lot of illustrated drawings in cartoon format. They are quite entertaining but the materials are generally not related to option strategies. There are also very little coverage in the technical analysis aspects and trade setups of the strategies covered in the book.
For those who are looking to exploit and get a general understanding of the more advanced options trading concepts, this would be a good book to start with.
Keilani Coffey (verified owner) –
This is an informative and easy to read book on options. It contains a good amount of information with some hypothetical scenarios. There are cartoons along the way, but they do not really add to the discussion and literally just break up the text. I enjoyed the book and feel I learned more about advanced options. Trading options is one of those things you actually have to practice to understand as it can get pretty complicated (Option Monster is a good resource site).
The book is easy to hold and is the size of a small graphic novel. I would definitely pick this book up and give it a shot if you are trying to trade options.
London Case (verified owner) –
Despite the cartoons and “cute” graphics, this is actually a textbook – do not think you are going to just read it and “get it” – no, you will have to actually study this book as you did in school. Keep a pen and paper handy as you read to note down items to remember, or if want – use a highlighter.
I do not particularly like the style of the writing, but after you get past that there is some really good information in this book. Especially the parts where the author reviews basic investing strategies and pitfalls as well as the somewhat strange way that options can impact your income taxes.
The book starts out slowly, but moves along more quickly, after making sure all of the readers are up to speed on the terms and option products being discussed.
This book presumes you have a basic understanding of options and investments in stocks and ETF’s. It is not for beginners.
Alejandro Lawson (verified owner) –
While I thought many of the illustrations were distracting and silly the text of the book delivers a workable
overview for many advanced options strategies.
I have been trading options for nearly 14 years and although I am not a professional trader I am an
active trader; I make 15-30 options trades per month. Option trading is my primary market strategy
and I definitely took some good information from the book. My main strategies are covered strangles,
vertical call and put spreads and calendar spreads both puts and calls.
The sections on risk I thought were particularly good as well as picking stocks for investment. It draws
from many of the same tenets I use on a weekly and monthly basis. Namely picking good companies coupled with
price point, trading range and length of position.
If you have some background or exposure to options I think you can get some useful nuggets from this book.
Recommended. Happy trading.
Logan Avalos (verified owner) –
While I do regularly use options as hedges to protect my portfolio, I’ve never been an advocate of trading options as a substitute for investing. After reading this book, I’m more convinced than ever that trading options is not the way I want to spend my days. Sure, the book taught me lots of new ways to structure trades. Instead of simply selling covered calls as I have been doing for years, I learned about LEAPS, spreads, collars, straddles, strangles, bull spreads, bear spreads, box spreads, debit and credit spreads, and more. The author makes all of it understandable, but, for me, retention was a problem. In other words, the chances of my putting any of this into practice are not very good. One thing I did try was swing trading. I bought in the money calls ready to expire in a few days. If the stock had gone up, I would have sold before expiration, to make a quick profit. Unfortunately, my bet proved wrong but all I lost was the delta on the options. In short, there’s a lot to know and do with option trading. If you’re determined to trade options, the book will help. It’s well written, with easy to follow examples.
Cleo Nichols (verified owner) –
This is not a book on “advanced” options. It is the sequel to Getting Started in Options and in comparison presents more advanced information, so in that sense the title makes sense. But the author doesn’t get into the truly advanced stuff that you would find in a professional options trading book. This content wouldn’t really fit the cartoony format of this book, nor would it fit the core audience, which is clearly non-professional traders looking for more in depth information than what the previous book contained.
With that said, I think this is a good book for those looking to learn how markets function and how to trade options and develop strategies. Basic information on taxes, trading rules and regulations, and reading market data is presented in the context of options, allowing the reader to really put together a good idea of what options trading really requires.
If you want a simple, mostly non-technical options book that focuses mainly on how nonprofessionals can trade in them, this isn’t a bad pick. I’ve read other books containing the same information and felt this is a good one to give to a complete rookie, but not many experienced traders will find it all that useful.
Thaddeus Sparks (verified owner) –
Getting Started in Advanced options is an easy read which uses examples in a “graphic novel” format that shows you where to place your puts and call your calls. I recommend this book to anyone with some trading knowledge who is considering options trading. It is easy to read and highly informative. It helps you evaluate the risk benefit relationships that are necessary to be recognized in options trading and place them to your advantage. Happy investing!
Emily Palacios (verified owner) –
The advanced option trading techniques included in this book include spread strategies, hedging positions, synthetic positions, and options on futures and market indices. Unlike a traditional finance book, it has a lot of comic-style illustrations, but these are really distracting, not to mention VERY poorly drawn. So bad to the point as to make it hard for anyone to take this book seriously. A lot of materials are placed on sidebars and side boxes, which make them difficult to read and to place in the context. Why didn’t they just produce a traditional book on such a serious topic? (Serious because you can lose a lot of money in the options market!)
The text itself is not that bad. I learned a few things especially concerning synthetic strategies, something I’ve been pondering. One problem with the content, though, is the author comes across as really de-emphasizing the risks associated with these strategies. Sometimes he really sounds to me he’s saying there’s very little risk in some of them, which we know cannot be true, even with covered call writing. (This book is published in Singapore — may tell you something about the quality of this volume.) There’s also very little credible info on tax consequences. (New legislation in the U.S. has made taxes on options very, very complicated.) They should really take out the ugly comics and instead expand on the text and give us more examples. The book really could have been so much more, in content and in value.
Atlas Keller (verified owner) –
Pretty awful.
Kenji Barajas (verified owner) –
I learned how to trade options on a daily basis by learning from this gentlemen. I recommend both of his option books strongly coming from the novice level to an advanced option trader. I only wish I could thank the author personally for allowing me to understand this complicated trading vehicle.
Kody Carson (verified owner) –
Options is the modern mechanism for investing. The old advice was to get a good index fund and don’t try and over-analyze the random behavior of stock prices (see Random Walk Down Wall Street). With that said, the new investment mechanisms avoid actually buying the stocks, but instead work with options to either buy or sell stocks at certain prices. Some investors believe that it’s important to actually own the stock and collect the dividends. This has especially been true of the energy stocks over the years (and blue chip stocks like IBM back in the day). But the world has changed and so has investing. That’s what this book is about, namely, how to create an investment strategy in the face of a volatile or changing market (stock price). So, not only are you not necessarily owning the stock, you may end up with nothing if your option expires because you are “out of the money”.
The book itself is written in an almost “Dummies Guide” approach with each topic taking 3 – 5 pages and includes key terms and takeaway boxes with key ideas. Personally, I like this approach because some books on investing really take abstraction to an extreme. Even this book doesn’t provide enough meaningful examples and just provided illustrative concepts that showed the math behind the approach. The figures also really could have used some overlay of actual price movement. I personally think that taking some real world numbers would have been extremely beneficial. But you can certainly understand the concepts without these examples, but I think that visualizing the decisions from day to day or week to week would have added some value to the book.
But if you’re looking to widen your investment repertoire and simply don’t understand calls, puts, spreads, hedges, synthetic options, options on index funds (tricky!), and risk, you’ll get quite a bit from this book. The book has almost nothing about online resources, but it’s not surprising because the author really doesn’t need to advertise for eTrade, ScotTrade, and similar type of online investment (bookies?). The author does warn that certain options are costly due to fees, and this advice really is important because profit always needs to take into account investment costs.
All in all, the book is very approachable and can be useful for anyone that has patience, time, and some money they’d like to invest in something other than traditional stocks. If this is all above your head, you can still pay an investment house to make the choices for you in some kind of fund, but that typically is costly as well and doesn’t guarantee results. I will say that it’s the easiest investment read ever for me and I did learn quite a bit. Now it’s time to try out the strategies and see how financially dangerous options can be!
Holland Cunningham (verified owner) –
While I know a bit about options, I chose this book to extend my knowledge. Understand that I am not currently trading, but I’m at least thinking about it and learning more about it For example, I had read about spreads but never fully understood how they work. Now I am clearer how spreads work. I understood hedging as protection for business but not how I could or would use such a strategy.
Even if you never plan to trade but want to understand financial reports, this is your book. Strategies, options, and how to put them together in a workable action plan — all are covered. I could do without the cartoons, but the remainder of the book is very informative.
Nalani McConnell (verified owner) –
This book was great for getting a quick understanding of the different option plays.
Jude Moore (verified owner) –
This is a good all around book on trading options for both beginner and experienced trader of options. The author has a knack for getting to the meat of the subject quickly and neatly. The section on taxes, the last part of the book, you are not likely to find in any other book on options.