5 comments about Options Trading for the Conservative Investor: Increasing Profits Without Increasing Your Risk (Financial Times Prentice Hall Books).

1. Essentially a book that attempts to frame options trading in a world where your fundamental analysis of a company will drive strategy. The basic assumption of this book is that you can effectively analyze the fundamental strength of a stock and that you can execute several options strategies to increase the income generated from the stock. However, many of the strategies presented still require one to utilize technical analysis (e.g., choose strike prices based on support-levels), as well as provide little in the way of strategy modiifcation if the company's fundamentals change during the life of a call. This is a good book for developing some new investment strategies, however the reader will benefit if they have a good understanding of technical analysis as well.



2. Overall lots of information, but Thomsett does not fully explain the risks involved with selling covered calls. Essentially all of his model portfolio would have been in the money after selling the Leaps wtih in weeks. Rolling would not be practical as one could only roll up for the 27 month Leaps. Selling a Pepsico 27 mo. Leap at 50 with a current price (in Sept of '02) of 48.48 netted a $4.30 premium. The stock hit $50 within a month or so and was at about $63 by expiration. The only way out would be to roll up (at an ever increasing cost), hold for two years, or buy back the call. For the average investor (including myself) seems a bit complicated. If after selling a call, the price falls, the risk is even greater. One would need to close out the call by purchasing it back before selling the shares or risk having a naked call. The stradles described later in the book may reduce risk but for most trading accounts managing margin is not for the faint of heart. Definitely read this book with a large grain of salt and thourghly understand the risks associated with such options trading.



3. Great book if you are considering doing options in your IRA or Roth. Author is very straight forward in pointing out pit falls with a number of option stradegies that could get one into trouble and on the flip side those that work that will build your portfolio over time. I also liked that the author spent some time on tax implications of Options that other authors never speak about. Author could have spent some time on how one searches for stocks that fit the conservative option stradegey, i.e. how to use filters and screeners in various web sites.



4. 
   The ratio of talk to concrete examples is 85% to 15%. I like straight to the point books, that can and should reinforce important points but keep the fluff to a minimum...



5. As an investor I used to take investing with options as more of a speculative strategy, after going through this book, my view about investing with options is changed. Now I am convinced that in some situations, investing with options may yield better result then stocks.
   One negative about the book; is repetition of the concepts, I would not complain much since that repetition clear my understanding of the new concepts.

5 comments about Street Smarts: High Probability Short-Term Trading Strategies.

1. I bought this book on a recommendation from another trader. I paid a lot less than the $175 they are asking now, but I still thought it was very expensive. I read through half of the book and thought it was interesting. On one of those days I had the book open on my desk and realized that one of the patterns from the book was forming! I waited till the right moment and took the trade on 2 year treasuries. Exited the trade about a minute later with a $225 profit. That paid for the book on a single trade.
   
   I realize I could have also lost $225 on that trade, then the cost of the book would have been around $350. I was now happy with the purchase of the book. I looked for more trades, but did not find any that week. Then the book got pushed aside and forgotten about. I found the book again last week because I heard someone mentioning it. I pulled it out and reread it.
   
   I think the book has something to offer. Is it too expensive? That is hard to say. For me it became free after one trade. Was I just lucky? I don't think so because I can scroll through charts and see a lot of the set-ups in hindsight. So the trades are there, its just a matter of being there to pull the trigger as they happen.
   
   I hope to get more out of the book from this second reading. One thing I have noticed is that many times I read a book and get something. Then upon rereading it I pick up many thoughts that I did not see or understand during the first reading. Maybe I wasn't ready at the time, but having many dozens of books under my belt and lots more life experience in between the first and second readings, I was able to digest more.



2. you can always spot s loser by one of (or both) of two reactions:
   
   1- They want to get into a business to make money but think $200 is too much!!
   
   2- They expect what they read to agree with their bias
   
   Anyone who wants to make money but thinks a book is expensive at $170 has the wrong personality for trading. If you are like that, you have no business trading because you are too greedy and a coward.
   
   Secondely, when you are making a comment about someone, it is really important to REALLY be sure that what you are saying is acccurate. The implication that Linda does not make money trading is just ridiculous. The woman is a bloody Market Wizard, for God's sake! She is also a pretty crap promoter of her services.
   
   The book is excellent. The question is: does it contain methods that can make you money? Of course it does. You guys are clearly sleep walking because you are concentrating on believing that every method in the book will make you money all the time under any circumstances. Quit believing that and pick the ones that work under different market conditions.If you can't, it is your fault, not the book's.
   
   If you watch Linda trading, you will see her using those setups under the right conditions. The fact is, if you cannot make money trading the setups in the book, you are either new and have to learn the basics first, or you are not cut out for this business.



3. I cant this book is $175 !!! for the material inside is plain junk, i have read ALLOT of books from gann to elliot to andews and this has to be the worst book i have ever read the methods taught are very indicator based and will not work in the long run the wolf wave method is basicly elliot wave rehased, there are better books to learn the elliot wave best book in my opinion robert miner's book, as for momentum is concerned larry williams. and for breakouts edward's and magee. I have been trading for 10 years but i constantly buy books just to see if i can atleast get one golden nugget out of them, this book however has no good insight into anything i did not get one good idea out of this book. As for some of the reviews on here if you click see all my reviews this is the only book they have reviewed ....hmmm but if you are serious about trading the books i reccomended above are very insightfull atleast they were for me, miners book is old but is full of new ideas and less based on indicators and has very easy to follow rules for elliot, i guess what they say is right old is gold. good luck



4. I found this book to be very insightful in spotting possible setups on a chart. The downfall is that it's very expensive. I got mine via digital delivery on Ebay for $49. The techniques must be followed exactly in order for you to profit from them. And remember to use stops...only a fool trades without using stops.



5. This is an advanced book, and it does no hand holding. It is a trading niche book. It is not about day trading, nor momentum trading, but a unique subset of short term trading called "swing trading". If you do not know the difference, this book is not for you. It is not earth shattering. But, it is written by traders who have done it for a living for decades. Thus, it is worth knowing how they think, and how they have earned a living. And, yes, you mostly only make a few hundred bucks at a time, if you are good. Not riches, but "a living".
   
   The price is high, but this is a small niche market. They will sell few copies. Linda Raschke has done this technique of swing trading and earned a living at it for decades. I would not expect her to take time off to write about it for chump change. If it were a mass market, a lower price would be in order, but this book is good for very few people.
   
   I give it four stars only because of the terse format. BUT, they are traders not literary artists. I cannot fault them for not writing War and Peace.
   
   If you are an experienced trader, and expect nothing more than a few hundred bucks when a trade goes well, and protection from loss when it does not, this book will either confirm what you know, which is helpful, or add a trick or two that you did not know, which is more helpful. Traders are successful who earn a living, a few hundred dollars at a time, several times a day, day after boring day. It is not a book for others at all, and not a book to start with. If you magically expect more money than this, buy another book. And, nothing in short term trading is really new over time. This is not a breakthrough book of new and novel ideas. The first idea, "Turtle Soup" came from the Turtles which have been around many decades. It is nice to read that this pattern has not yet worn itself out, and is still used. I am happy to have it in my library. I am happy to know that old tricks still work for old dogs.

5 comments about The Electronic Day Trader: Successful Strategies for On-line Trading.

1. This book is essentially obsolete just three years after its publication. Stocks are now traded in decimals, and the spreads on heavily traded stocks are now almost nonexistent, sometimes being less than one cent a share. Consequently, you can forget about any of the strategies or information regarding "pocketing the spread", "getting between the spread", etc. With the proliferation of ECN trading, the influence of the market makers in a stock has been markedly reduced. In a stock that trades 80 million shares per day, a market maker with a 100,000 share block is not going to be able to move the stock significantly, and ECN trading can overwhelm his influence. Likewise, information gleaned from the Level II screen, while still useful if one knows what to look for, is no longer the Holy Grail. Also, day trading firms, like the authors' "Broadway Trading" are on the way to extinction, now that some big online brokers offer direct-access trades for less than a quarter of what day trading firms charge, as well as offering free Level II quotes and other information not available to the day trading firms.

   While the book contains a few nuggets of trading info, it was not written in a logical, easy to follow manner. As has always been the case, aspiring traders need to study the markets intensely and develop their own trading techniques; they cannot expect that any book will teach them how to be successful in a field where very few people ever succeed.




2. good book , nice condition



3. This book completely fails to realistically convey the relative risks and profit potential for the average wannabe day trader. Im talking about someone with less than a few thousand to play the market. Unless you have big bucks and Level II quotes forget day trading unless you are very lucky. In the trading parlance, I wish I had a short position on this book at its current price, and could cover my short at the current used price! Save your money.



4. They went bankrupt, which is where you would be if you followed West and Friedfertig's methods. The book was a copy of Jack Schwager's Market Wizards series, due to the interviews conducted with "traders". You would be amazed if you saw some of these people and didnt read their words in print. Somehow they would not come off so sharp. Trust me!

   Also do you think our authors would be able to spot "managerial talent" over a few aspiring proprietory traders? No they hire guys who have previously filed bankruptcy in their past and pipe up their accomplishments, which are a joke when you realized they bailed on creditors!!

   Save yourself a dime and avoid it-if someone gives it to you, and you can't return it, use to start the BBQ grill. I could go on and on about SEC/NASD violation, getting short on a downtick, etc but I wont!




5. There are some good ideas that you can rescue from this book. Therefore I think you should buy it since you can make much more money and certainly recoup your small investment if you employ 2 o 3 good tips.
   
   Any way, from my point of view a trader must always read as much as he can. There is simply no other way to prepare one self for this difficult yet incredibly rewarding activity, but to learn and put into practice as much ideas as you can, at least by paper trading first.
   
   The are a lot of books on the subject, however many of them where written 2 o 4 years ago and that kind of makes them obsolete in this constantly changing field.
   
   The internet offers great places where you can learn more specialized trading techniques. One of those places that I have found to be worthy is ProfitableStockmarket dotcom.
   
   They focus mainly on momentum trading and employ a rather simple yet effective strategy. I think that for a trader to survive and be profitable, its neccessary to keep their trading as simple as possible. To much confussion and technical indicators will most of the time make you slow in your decisions and froze you up when a good opportunity is right in front of you.
   
   In the end it's all about buying or selling with out hesitation, and doing it over an over again according to your set ups.

5 comments about Technical Traders Guide to Computer Analysis of the Futures Markets.

1. This book is nothing special. I really disagree with the author's interpretation of the ADX indicator. Absolute level is far more important than slope. The day trading systems shown will lead you to the poor house in no time. Presents some novel ideas though.



2. I know Charles Lebeau. He does occasional system seminars with my father Dr. Van K. Tharp one of the "Market Wizards" and author of Trade Your Way to Financial Freedom. Charles Lebeau is a great trader. When anyone ask me about a technical indicators book this is the one. Charles is very through. He noticed the best traders in the industry are usually right 30% to 40% of the time. They just cut their losses short and have these huge winners. Charles tested most of the major indicators against random entry i.e. (Flipping a coin) most of them don't do any better. Your exits, psychology, and money management determine if you are making money or not. Don't pay too much attention to your entry. This book explains his results and how to use each indicator. Almost any indicator will work with proper money management. I done well even with flipping a coin and the right stop. The indicator best for you is one you feel comfortable with and will stick with. BUY THIS BOOK and hopefully what I wrote may make some sence to you.



3. I only discoverd this pretty old book recently. I am suprised to find there are quite a lot of trading tips. What make this book stands out of the crowd is the tips were very concrete and practical. The discussions about exit and stop loss are parcticular good. Many other books just said cut the loses quick. How quick? When? This book gives you some hints. The authors also give some tricks in using indicators which I hope I could know earlier.



4. This book gets a 4 stars rating because of its expensive price (the book is only 220 pages and full of empty spaces). But, price is always subjective. You may treat it as the cost of your education.

   Anyway, what makes this book so very valuable is the fact that it is easy to read, clear, definitive, and yes it has so many valuable information on what parameters to use for each indicator. How many of you left confused on what parameters should be used? This book will definitely clear away the clouds in your mind.

   LeBeau has done extensive research on indicators such as ADX and his insights on other popular indicators are extremely valuable.

   The title may be slightly misleading because bulk of the contents is explaining each technical indicator (120 pages), while only 45 pages on explaining how to build a trading system. Yet, it is clear and concise.

   The final Chapter is also valuable. It deals with 12 Day Trading systems that the author has selectively chosen out of all day trading ideas he has or has received from other great traders.




5. This book is a must read for Trading System Developers. The concepts can be applied to many markets. The section on testing alone is worth the price of the book.
   
   www.iExpertAdvisor.com

No comments about Trading Futures For Dummies (For Dummies (Business & Personal Finance)).

2 comments about Starting Out in Futures Trading.

1. For the price this is a great book to learn and help understand the specifics that make up all the basics in trading commodity-futures. After reading this book, I felt as if I had taken a formal college course on the subject of Futures and understood it much better from various angles now. There's no "hype" in the book, no agendas, no further products or services to buy being pitched to you, just plain vanilla (ok, french vanilla) basics being laid out for you in textbook fashion for you to digest in your own terms. I like that - it's refreshing in a way. It is probably like this because it was really written 20+ years ago (don't worry, it's been revised many times to be modernized - 5th edition, 1993). The book was originally written and printed in "Commodities" magazine as a popular mini-course series (before the magazine changed it's name to the modern "Futures" magazine we know it as today). Even though I knew much of the content from personal experience (the most costly way) or from other readings, my CTA, etc, I did not always understand the "why" behind the rules I was following & how the markets work the way they do from both a technical and fundmental perspective (dynamics). Of the some 28 chapters, I really took interest in almost every one. I can't say that about most of the other trading books I've read. Put it this way... if I could keep only 5 trading books, this would be one of them. You'll likely dump more than that on the commissions for 1 trade - or, worse yet, even more than that on 1 bad trade. ** Beginners, I recommend the following: If your goal is to have deeper pockets from trading - then you must first go deeper in your understanding of futures markets & trading them (i.e. Read the book).



2. Please note: This review refers to the 1991 edition.
   
   It is a good book, but this edition is plagued with typos, and mistakes in at least one chart. Don't make the same mistake I did; buy the last edition (I bought mine on the store with very little time ...) I haven't had the chance to check out the latest version (Starting Out in Futures Trading), my guess is that it's corrected and updated.
   
   About his writing, I like the fact that he mixes personal experience with academic and corporate studies about the market. I think the book becomes very useful that way.

5 comments about Generate Thousands in Cash on your Stocks Before Buying or Selling Them: Third Edition.

1. Full of valuable insights, rules of thumb, strategies, and tactics to make extra income on stocks without selling the stocks. I am new to options and this book has given me a solid basic education on how to generate cash immediately from stocks I already own. His strategy of selling covered calls and puts on the same stock, depending on whether the underlying stock is trending downwards or upwards, is by itself a powerful strategy to bring in extra cash in any type of market. The author uses real world examples of specific stocks to illustrate how to execute the strategies and tactics that bring in profits. His basic premise is that a successful options trader needs to use fundamental stock analysis to determine which stocks to purchase and technical analysis to determine when to buy and when to sell these same stocks and/or the options of these stocks. This is a book that deserves multiple readings and constant referral to as one navigates the stock market. I highly recommend this book. If you are interested in making money in options and stocks, you should purchase this book and learn how to succeed with the author's many strategies and tactics. His rule of thumb for the successful investor to do the opposite of the particular 'Buy', 'Hold', or 'Sell' opinions of professional analysts was amusing and insightful.



2. The strategies in the book are attractive. However, there seems to be a constant underlining theme: "All the setups will work". There should be more material on considering the downside risk also. For example, in the strategy that focuses on stock with price less than 5 dollars, the trade example only focuses on the amount of profit a person can get when the stock increases in price. There is very little discussion how to manage the position when the stock price goes down.
   In summary, use more caution when using the strategies in the book.



3. I had began studying this book aside my trading courses and it has been very helpful filling some gaps, especially on technical analysis.
   The technical analysis part is very well done and worth the price of the book alone.
   This book will teach you also how to get out of trouble when things will not works as planned.
   When followed to the letter, the methods in this book are very reliable and successful.
   You need to be patient of learning very well what it is written and be sure you are really executing the trades with very good attention to detail.
   Probably you will need to study this book as you would do it at school.
   Do not rush in to trade just because it seems very doable, wait until you are sure you are executing precisely what is written on the book and that the stock you are going to trade, has the fundamental and technical requirement to apply the strategies of this book. that is very important.
   The only difficult part is to find the stock that meet the requirement, But once you find the right stock or wait for the right conditions on your preferred stock before placing the trade, it will work as planned.
   Some trades are pretty aggressive, and I advise to do them only when you have developed some experience.
   In any case a great book with great technical and sentiment analysis, some very interesting strategies and a lot of examples of real trades. It will teach you how to pick your stocks, how to find good entry and exit points, especially how to anticipate downturns in the market and your stocks and how to protect your gains.
   again, I suggest of being very carefully on following instructions in detail and picking the stock and the market trend that meet all the requirement described in the book.
   
   Of course, try of getting the third edition of this book because it is the most up to date.
   
   In any case, for those that are not fluent with "options" trading, I suggest you to read some other books or take courses that teach you the options instrument and its implications, in order to understand your obligations and risks in using options. another important thing that you need to get familiar with, and this book does not cover completely is, what i would call: "options behavior" (for not being technical), which sometimes may be quite unsettling to the inexperienced trader and scare him/her out of a trade even when nothing is wrong, but to the inexperienced trader may look like things are not working as they should.
   hard to explain in few words... you need to take your time learning.



4. In my quest to become a profitable trader I have read many books on both stock and option trading. This book is unique in that it combines trading stocks with practical option strategies to reduce risk and increase profits.
   Most books exclusive to stock trading tend to reduce risk using stop loss points.
   In addition to offering insights on how to place stops so you are not a victim of "stops running" and `Front running" traps by market makers (explained in the book); the author shows you how to use options to enhance profits and minimize losses when trading stocks. A chapter entitled "risk control and money management" discusses how to strategically place stops and how to use options as a risk reduction tool applicable to most trades in the book.
   On the other hand most books dedicated to trading options tend to discuss esoteric and theoretical aspects of option trading such as greeks and implied volatility etc . Rather than rehashing what is present in most books, the author focuses on simple option strategies that can be effectively used by the small stock trader to improve results.
   To me this was a breath of fresh air, since almost in every options book each author goes through the same things (greeks, implied volatility etc) in a different way. This book offered me what I was looking for. Strategies that are simple and practical and help me make money.
   There are many firsts in this book. It is the first to offer a practical and simple method to manage long term holdings as represented by convergence/divergence charts. Having heard about the potential explosive profits reaped from short squeezes, this is the first book I have seen offer a stepwise procedure to identify stocks with the potential of a short squeeze . The author also discusses a scan to find stocks reversing from a bottom that he uses to identify low risk trades. He then goes through the process step by step to show you how to narrow down candidates to find profitable trades.
   My favorite Chapter is the one entitled "Tricks of the Trade" where the author discusses how to play different trading strategies based on his practical experience in the market.
   As another reviewer mentions this book deserves multiple readings and constant reference due to the practical and innovative concepts it offers.



5. This probably has to be the most valuable book I've bought to date on share/options trading. Maybe not a lot of new info for the "experienced" options trader, although it may be a reminder even to them of how truly effective certain strategies can be... especially with relatively little risk. But I would say a MUST-HAVE book for anybody else and especially for those considering a start in options trading.
   
   It's a book that gets the point across of ensuring you're getting paid FIRST, when entering a trade, and not just hoping that you make money later.
   
   Here is a book that goes beyond just the theory and ideas repeatedly covered in other books. The tools and methods suggested may not be new, but the concepts are certainly eye-opening, well described, and certainly achievable. It's more a book on how to EARN AN INCOME (more than capital growth) and how to TIME your trade/adjustments-to-trade to achieve this most profitably.
   
   The greatest benefit I gained from this book was that it gave plenty of suggestions and ideas on how to salvage a bad trade, using strategies such as covered-calls, writing puts, and collars (to name the main strategies). He also does a great job describing how to "fine tune" his techniques, by using certain indicators to better time entry and exit points, as well as going through how to deal with the number of possibilities of a position nearing option-expiration dates or if a position was to adversely/unexpectedly move against you before then.
   
   His techniques though are not all about salvaging any "bad" positions still held, but also useful in entering a new trade and maximising profits and reducing risk, through the use of selling options... and insights on how to monitor and profitably ADJUST those positions so as to maximise your returns by the time you exit the trades.
   
   The best thing though about the book is that he uses real examples and goes through how to handle a number of possibilities (negative outcomes as well as positive). One truly begins to understand a trader's thought process and mentality before and after entering a position, by going through his detailed examples.... and it's reassuring that the results claimed can truly be achieved using strategies and means that are readily understandable and available.
   
   The only negative(s) I have about this book, is that Samir doesn't go into the "finer" points about short-selling options and money management and could make somebody feel too overconfident and not appreciate ALL the risks involved. He eludes to them towards the end of the book but these very important points can easily be glossed over by the unwary reader. A lot of the examples he provides are stock/option positions in the tens of thousands... not so risky if you have an even larger starting capital, but potentially very risky if it's smaller and brokerage also begins to have en effect too.
   
   For example one would need to: clarify how much option collateral is necessary to open a particular position, take into account brokerage, take into account "slippage" between ask/bid prices, be prepared for and have a plan to deal with an increase in implied-volatility (something not touched on at all). All these and more, will determine one's starting-off capital and how much risk one is prepared to take per position.... Determining individual risk isn't covered very well in this book, thereby making these strategies and returns, to appear deceitfully "easy".
   
   Finally remember it's a percentage game, and it's very easy while reading his book, to get too carried away with the "tens of thousands" of profits one can make through his strategies... these returns are only possible on large initial positions... the percentage returns though will remain almost constant.
   
   Despite this negative feedback, I still think that the book deserves 5 stars, purely on the excellent information provided. Strategies, their execution, and profit returns, are truly realistic and within the means of most people... provided one has an adequate starting capital and sound concepts of money management

2 comments about The Rookie's Guide to Options: The Beginner's Handbook of Trading Equity Options.

1. Options are a complicated investment instrument, but if properly understood and implemented, they are far less risky than owning stock or mutual funds. And as a bonus, they are most often more profitable. Trading options, one can choose to be a risky gambler (not recommended) or a conservative income generator.
   
   The trick is understanding options and understanding risk management. If you trade options WITHOUT understanding them, and WITHOUT any risk management implementation, then by default you are a risky gambler. You will be out of money before you know what hit you.
   
   The option world has its own lingo. And there are myriad strategies to sift through before determining which one(s) suit your risk/reward desires. Placing the actual trade orders with your broker requires a thorough understanding and fluency of the lingo, as well as a confident understanding of the strategy you've chosen.
   
   The good news is that this book will actually TEACH you what you need to know to be a conservative income generator with options. I can assure you it is the ONLY book that TEACHES this. I own all the major books on options that have been released in the last five years and this one is by far the best and most practical. And long overdue.
   
   To me, in order for an author to teach options trading, he or she must provide the real world philosophy behind a strategy, real world examples, real world gotchas, real world "how", and most importantly, real world "why". Of all the books I own, this one provides the total package. The others do a good job of perhaps the philosophy and the how, but totally lack the rest. In short, no book until this one teaches the complete knowledge one requires to be successful at option trading for income.
   
   I am a rookie in that I had not actually traded options until studying this book. I am NOT a rookie when it comes to attempting to learn how to trade options. The other books did not leave me confident in my abilities to consistently earn income with options. Thus I didn't make any trades. This book gave me the confidence to start trading AND EARNING INCOME. That point alone truly sums up the value of this book compared to all other books on the shelves. The other books are simply lacking in regard to earning income with options. They are good resources for information but not for implementation.
   
   The author's approach is conservative. You will learn how to manage risk and see that options ARE a good, safe investment instrument if used with conservative strategies and prudent risk management techniques. You'll also learn, perhaps by constructing a spreadsheet on your own (strongly encouraged by me), just how much potential income you can earn. You'll be pleasantly surprised.
   
   However, a strong warning here: You MUST understand and comprehend what you are reading. You can't skim this book and expect to do well. In fact, you'll fail if you skim ANY book on options. Most likely, you'll fail big time after a lucky string because you THOUGHT you understood. If you can't commit to learning, and I mean intensely learning and understanding this book, then please steer clear of options. There are no free rides. You must invest brain power to do well. Recognize that most people do not WANT to invest the brain power required. It's hard. It's intense. It's confounding. It's WORTH THE EFFORT. Eventually it clicks. Decide if you do want to commit, and if so, buy this book. It's the only one you will need to conservatively earn a steady income trading options. If you do invest the brain power, you will be proud of yourself and you'll do well financially with your new knowledge.
   
   I want to add that the author is an experienced floor trader, and a gracious man who has replied to all questions I've asked of him via email. If you are inclined to purchase $2000+ in software and another $2000-5000+ in so called "training" or "education", please save your money and seed your options trading account with it instead. But before making ANY trades, nail down what this book teaches. It is all you need.
   
   FYI, my own trading focuses solely on Credit Spreads (which have their own chapter in the book) and utilizing the author's philosophy on risk management. But I had to understand the ENTIRE book prior to making that decision. You would be wise to do the same before deciding your own direction.



2. Before reading Create Your Own Hedge Fund (one of Marks other titles)I considered options to be far too risky and exotic and solely for the professional trader. However after reading the book options were no-longer anything to fear and I was completely sold on the idea of using options to both reduce risk and increase profits.
   
   The Rookies Guide to Options takes the ideas that were previously introduced and takes them to the next level. Concepts are introduced and explained in a way that makes them easy to understand and completely transparent. You're never left wondering - but what would happen if?
   
   It's a master class in options from a truly brilliant teacher.
   
   I can't recommend this book enough

5 comments about New Insights on Covered Call Writing: The Powerful Technique That Enhances Return and Lowers Risk in Stock Investing.

1. an excellent guide to understanding covered call writing. as a retiree and never having written covered calls, i am convinced it is an opportunity for conservative investors offering potential returns competitive with stock ownership alone and better returns than those available on bonds. mr.lehman covers all aspects, from underlying stock selection, selecting good covered writes, web sites offering all sorts of data and even tax consequences as structured by IRS.



2. I liked this book and would recommend it to those interested in covered call writing. There are a few things to keep in mind while reading this book:
   
   1- McMillan is a very well established authority on option strategies, I remember reading his options books way back in 1984, when I was the local options specialist at Dean Witter. However, if you read his comments on covered call writing in his other books, he's much more guarded with his support than he is in this text.
   
   2- Nowhere in the book do the authors discuss the extreme increase in time and especially paperwork that is required to successfully implement this strategy. I've always thought of managing an equity portfolio as investing (mostly passive), managing covered call positions is more like work (trading takes lots of time and effort to do it right). That's OK, call writing also reduces risk and gives you a lot more control, but be prepared to invest a lot of your time.
   
   3- In my experience, most people really have a hard time with this strategy. Yes, it's easy to implement, but most dedicated options traders find this a bit too basic for their interests, and it ties up too much capital. Most equity investors have a hard time with the amount of work, loss of long-term capital gains impacts, tax reporting headaches and giving up some appreciation potential.
   
   4- The 20 stock study described in the book is very misleading. For some reason the positions with 163 months of data show covered writing (CW) underperforming a buy-and-hold (B&H) strategy by about 700 basis points. I don't know if this is due to a flaw in the data or something to do with option premiums in the early years of the study. Data from comparing
   CW returns to BH returns for periods less than 163 months show identical returns between the two strategies. This is consistent with results from more rigorous academic studies, which generally show underperformance of covered writing of 30 to 50 basis points. This is also consistent with my own experience. This makes sense, since covered writing is slightly to moderately less risky than buy-and-hold investing, the returns should be similar or slightly lower.
   
   5- I was amused at the author's description of how he traded a client account. Frankly, trading in the way described is not a viable approach to investing. Covered call and cash backed put writing is best used to hedge and to reduce the volatility of returns. That's a whole different ballgame from the way the author traded the account in the book.
   
   The people who usually succeed with covered call writing tend to be really good percentage thinkers, very organized at tracking and analyzing investment results, and good with the basic record keeping. Those who thrive at it really love it, but it's not for everyone.
   
   I wish the book would have addressed these issues. Also, there is a lot more strategy involved in managing a covered write portfolio than was discussed in this book. To my mind, the subject was over-simplified here. I think the book also should have spent more time suggesting cash-backed put writing, which is the sister strategy (and has equivalent risk and returns) to covered call writing.
   
   Still, it's a very good book, and one I recommend without hesitation. I'm a big advocate of covered call writing and cash-backed put writing for those who are willing to take the plunge.
   
   I also highly recommend The Conservative Investor's Guide to Trading Options by Leroy Gross (with a forward also by Larry McMillan).



3. This book is an excellent primer on one of the safest form of the options game, at least from the perspective of the brokerage industry. So, if you're bored with watching your portfolio creep around at a few percent a day, you can write (sell) a call option for $100 on a $5000 investment (for example) and have a pretty good chance of keeping the 2% at the end of the month. Lehman and McMillan do an excellent job of providing return formulae and web resources for further research. But the question remains: do you really want to get into this? (I admit it's addictive). If you do you'll turn into your own stock churner. The brokerage fees aren't too bad if you use one of the discounters, but get ready to do some major capital gains calculations (profits from unexercised options are all short-term capital gains). Here's a hint: this is NOT the way Warren Buffet got rich.



4. As I view it, there are two key questions relating to any complex investment strategy:
   
   1) Why? Why should I pursue this strategy versus my current (probably simpler) strategy?
   2) How? If the proposed strategy is indeed worthwhile, how can/should I implement it?
   
   This book does a reasonably good job of answering the second question, with details on how options work, and a discussion of things like getting approval to trade them, tax issues and the like. I'd read some similar material elsewhere (including CBOE's own site), but this book pulls together a lot of disparate information, and filled in some holes in my own somewhat meager understanding of the mechanics of trading options.
   
   However, showing HOW to trade options is not very important, IMO, if one cannot show WHY one should trade them in the first place.
   
   The book jacket is not very encouraging in this light - mentioning that "Returns of 10 to 15 percent per year in conservative accounts - and as much as 20, 40, or 60 percent per year in more aggressive accounts - are possible". Of course, like most investors, I would be thrilled to get 60 percent annual returns, but experience and reading have taught me that those advocating investment strategies and making claims of that magnitude are to be taken with a BIIIIIIG grain of salt.
   
   Within the book itself, sky-high claims like the above are (fortunately) not emphasized. But basically, three rationales are presented for covered call writing:
   
   1) Ability to obtain superior returns through knowledge of the future direction of a particular stock (i.e. if you think/know Microsoft will go up/down in the next month, then do XYZ...)
   
   2) Ability to use more leverage (there is a long discussion of how different scenarios are treated from a margin perspective, with an emphasis on controlling larger blocks of stock/options for a given starting investment)
   
   3) Reduction of risk, possibly without significant reduction of return
   
   Personally, I think that markets are reasonably efficient, and that I lack and real ability to outpredict the market with regards to returns on specific stocks (once I normalize for various risk characteristics). So rationale 1 above holds no appeal to me.
   
   I am also not interested in increasing the leverage of my portfolio, and further, if I was, I think there are probably simpler/cheaper/more efficient means of doing so other than writing covered calls.
   
   That leaves rationale 3, which was what sparked my interest in reading this book. The author briefly discusses the BXM - an index created by the CBOE in conjunction with some research showing that a buy-write strategy (owning a broad index and mechanically writing calls against it) produces about the same return as owning the index itself, but does so with significantly less risk/volatility. But the authors' discussion of this research is short - about two and a half pages, and gives minimal or no mention of some important issues:
   
   1) The BXM strategy involves writing calls every month. This will create a variety of costs - brokerage fees, spread/transaction costs, taxes, and time. While these factors may affect any mechanical strategy (including indexing itself), they are likely to be much more severe for the BXM strategy.
   
   2) The BXM strategy is a backtested strategy. It's relatively easy to find strategies that would have outperformed the market in the past, given what we know now (Consider the MICROSO strategy - buy at IPO any stock that begins with the letters MICROSO), but one should approach such strategies with caution. It's much harder to identify and implement strategies that will work for the FUTURE, and that are in fact proven to do so over the subsequent decade or two.
   
   3) The market itself may have changed. Writing options is relatively more attractive if call premiums are high. It appears, based on evidence presented in this book and elsewhere that I've seen, that call premiums have generally been higher than they *should* have been (per Black-Scholes). This, in turn, has made call-writing more profitable than it otherwise might have been. But markets change over time, and it's quite possible that call premiums might trend downward (or may have already done so), towards, or conceivably even below, 'true value'. I don't know if this is the case, but it's something for a potential investor to be concerned about, and isn't well addressed in the book.
   
   The authors' also conduct their own study looking at writing options on a basket of individual stocks. While the results are interesting, the study is flawed - they emphasize tech stocks, and in their limited pool of 20 companies studied, one they've chosen is Microsoft, starting in 1988! At that time, I think, Microsoft was a relatively small company (it had only gone public in 1986), and it seems unlikely that someone selecting a portfolio of 20 (hopefully representative) companies to own and write options on would have chosen Microsoft. For what it's worth, the study finds that a covered call strategy on Microsoft underperforms buy and hold in absolute returns, which should hardly be surprising (writing covered calls means giving up some upside, and Microsoft had a LOT of upside during the time period covered), though there are other stocks in the study for which the strategy had better results. But the basic problem is that the stocks selected seem unlikely to have been representative of what a conservative to moderate investor would have chosen at the beginning of the study, and thus it's not really possible to draw broad conclusions.
   
   ====
   
   OK, moving on... The book is now a few years old, and thus misses some recent market changes. There are several funds that now implement buy-write strategies, making it much simpler for investors to access these strategies (I don't *think* the authors mention any of these funds, but it's possible I've forgotten a brief mention somewhere in the book). From my brief inspection of the results of some of these funds, they haven't done very well so far, which bodes ill for individual investors thinking they can implement such a strategy on their own.
   
   Anyways, I've devoted a lot of pixels to picking at the book. In my opinion, it fails to prove that the strategy it advocates is a good one. However, that doesn't mean that the strategy ISN'T good, only that the book fails to prove things one way or the other. But if you're convinced by other evidence that covered call writing is a good strategy, or if you simply want to take your chances (I don't advocate the latter), then the book does at least offer a good overview of the mechanics involved. That's why I give it 3 stars...



5. Very good book on covered call writing. Gives alot of of basic info for beginners, as well as advanced techniques as well.

5 comments about Stock Options for Dummies.

1. I was misled by the title of this book am disappointed. This book is NOT for individuals who want to take their investing to the next level and start trading options on the open market, as I had expected -- rather, it is for people who are offered stock options through their employer.
   
   If anyone knows of a good beginner's book for trading stock options, please clue me in.



2. First, disregard the 5-star rating. *I* think the book is good of course, but that's not why I'm writing this comment.
   
   To the two recent reviewers who complain that the book isn't about puts and calls but rather about ISOs, NQSOs, etc. - look, I'm sorry for your inconvenience but if you had taken about 2 minutes to skim the table of contents and the editorial review on the amazon.com page ("...your company's stock option plan..."), you would CLEARLY see what type of stock options this book discusses. In fact, taking less time to do so than it took you to write your complaint-reviews and give the book a poor review would have saved each of you $20 or whatever the book cost you.
   
   So my sympathies to you for your misspent $, but come on: blaming the author and publisher for your own haste and, further, feeling the need to do so publicly on an amazon.com review with one- and two-star rankings? (At least the other reader who did the same thing back in August, 2003 had the courtesy to give a 5-star ranking because of the reselling experience on amazon.com to rectify his/her error.)
   
   I sincerely hope that if you do begin to dabble in puts and calls - the other kind of stock options - that you do so with much greater care than you took in making your respective book purchases. Otherwise, you should really think twice about that side of the investing world.
   
   To the one reader who is looking for a beginner's book about the other kind of stock options: see "Futures and Options For Dummies" by Joe Duarte. But do your homework first before buying!



3. This book is aimed at employees elegible to receive stock options in the company they work for from their employer.
   
   It is NOT for investors wishing to buy and sell stock options through a stock broker.



4. This book, to me, was completely worthless. I purchased it thinking, like others commenting, that it was about options trading (puts, calls, etc.), not about "employee stock options" (which is what the book should be titled).
   I did read the author's response to criticism about the title, and I think he has some valid points; and in return I would like to sell him a coffee table book entitled "Cats" with a cute little kitten on the front. When he opens it I'm sure he'll be happy to see that it's full of pictures and information about catepiller industrial equipment.
   Also, his argument that anyone who looked at the table of contents would know what the book is about proves that he does not realize who his audience is: This is a "for dummies" book; it should be assumed that the reader knows very little about options. So, how would someone who knows extremely little about options know that chapters entitled "Stock Options: What you need to know right off the bat", Exercising your stock options", and "Finding stock option information online" are not what they are looking for?
   While this book may be very useful for someone wanting information about EMPLOYEE stock options, it was completely worthless to me. Make sure it's what you're looking for before you purchase.



5. This book is a review of employee options. I was hoping for a more comprehensive review that would explain options buying , trading etc.
   It is adequate for the topic of employee options , but nothing else.