Tuesday, January 16, 2007

Get Rich With Options: Four Winning Strategies Straight From The Exchange Floor - Book Review

Get Rich With Options: Four Winning Strategies Straight from the Exchange Floor

What Is It About?

As the title makes clear, this book is about using options to increase stock market success. The book is divided into three parts. The first part covers the basics of options. The second part presents the author's four favorite option strategies. The final section provides a list of option resources for the reader. The book is well written and a fast read. The book also excels in that it provides concrete examples with reference to numerous figures and charts.

What Did I Get Out Of It As A New Investor?

Options are a means to increase market returns. Options are also a means to decrease market returns. The question for every investor is determining which option strategies are best to achieve the former and not the latter result.

The author initially identifies and explains why most investors fail to gain a positive result from options, i.e., time and volatility, or lack thereof. The author then describes four strategies which take advantage of the above two factors most investors misunderstand.

The first strategy presented is purchasing deep in the money calls. The second is selling naked puts on stocks which one desires to purchase at a certain price. The third is selling covered calls on stock you already own to generate income. The final, which seemed a bit more complicated, was using option credit spreads.

As stated, the identified strategies are explained in a manner easy to understand and not at all confusing. The author goes out of his way to ensure that the novice market participant can follow the lesson being taught. Through the use of concrete examples of actual options traded with figures and charts, the reader is not left feeling lost. Overall, I found the information was presented in a straight-forward manner. It is clear that this author's goal is to educate the reader and not try to amaze them, which some authors like to do.

The Good News

Overall, this book provides a good introduction and overview on using options as both a strategic and tactical course of action in a portfolio.

The Bad News

Options, like any derivative investment, are not something that can easily be mastered. Like any tool, one can just as easily get hurt as they can benefit from its use.

The Bottom Line

For those who think options are beyond comprehension this book goes a long way to demystify their use. A good book for those interested in understanding and using options in their portfolio.

Other Related Reading:



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Two very interesting books.