Understanding Options

This new edition of Understanding Options provides all the basics you need to get started in the increasingly popular options market. Important new material includes overcoming assignment anxiety, LEAPS, the Greeks, protective and married puts, the collar, credit and debit spreads, straddles, the strangle, and options tips.

Auhtor’s Note:

If you are thinking of trading stock options or you are already trading them but losing money, this could be the most useful book you ever read. I have taken the classes, read the books, talked to the pros, and made the trades, so I can teach you what I learned. Like my other books, I try to explain options as if you were sitting across from me at the kitchen table. My goal is to save you time and money while educating and entertaining you.

An options book that is entertaining? I know it sounds ridiculous, especially if you have slogged through the dozens of other options books that are supposedly for beginners. Most of the option books I have read sound as though they were written for lawyers or mathematicians. They make options seem a lot more confusing than they actually are. Perhaps it’s because option contracts are legal contracts that include specialized terms. As much as possible, I leave most of the lawyerly talk out of the book.

The book is divided into six parts. The first part, “What You Need to Know First,” includes a thorough overview of options. In Parts 2 to Part 4, the book is organized the same way as you would trade, from beginner Level 1 strategies to advanced Level 4 strategies. I start slowly, patiently teaching you how to sell covered calls, buy calls, and buy puts.

In Part 5, you will learn intermediate strategies such as spreads, straddles, strangles, cash-secured and naked puts, the Greeks, Weeklys, and mini-options. I worked hard to make these strategies understandable to a novice trader. Then the pace quickens as I introduce advanced options strategies such as the iron condor, calendar spreads, and the butterfly spread.In Part 6, you’ll enjoy the must-read interview with Sheldon Natenberg, bestselling author and a recognized options expert. Finally, I include an updated list of books, classes, software, and other resources for those who want to continue studying options. (If you have questions while reading this book, I include a toll-free phone number in Chapter 26 you can call that will give immediate answers.)

Some of you might wonder how it’s possible to write a relatively short book when many options books are well over 500 pages long. First, most of those books are aimed at experienced traders, not beginners. Second, other authors devote hundreds of pages to explaining how options are constructed using complicated formulas. Although I do introduce pricing formulas, my theory is you don’t have to learn how an engine works to drive a car. Although analyzing options formulas might be interesting to mathematicians, I’d prefer to keep my eye on the bottom line: to teach you how to successfully trade options. Trading options is not as hard as many people think, but it’s also not as easy as some want you to believe.

Contents:

• Welcome to the Options Market
• How to Open an Options Account
• The Fascinating Characteristics of Options
• The Joy of Selling (Writing) Covered Calls
• How to Choose the Right Covered Call
• Step-by-Step: Selling Covered Calls
• Managing Your Covered Call Position
• Assignment: Your Obligation to Sell
• Introduction to Call Strategies
• How to Choose the Right Call Option
• Volatility and Options Pricing
• Step-by-Step: Buying Calls
• Managing Your Call Position
• Exercise: Your Right to Buy
• How to Choose the Right Put Option
• Managing Your Put Position
• Protective and Married Puts
• The Collar
• Credit and Debit Spreads
• Buying Straddles and Strangles
• Selling Cash-Secured and Naked Puts
• Delta and the Other Greeks
• Trading Options with ETFs, Indexes, Weeklys, and Mini-Options
• Advanced Strategies
• Sheldon Natenberg: Professional Options Trader
• Where to Get Help
• Lessons I Learned About Options

Understanding Options By Michael Sincere pdf