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Getting Started in Options. Illustrated Edition. Getting Started In..... - Product Image

Getting Started in Options. Illustrated Edition. Getting Started In.....

  • Published: April 2013
  • 284 Pages
  • John Wiley and Sons Ltd

A revised new edition of the easy-to-read, illustrated guide to the complex world of options investing

Investing in options is potentially very lucrative, but many shy away from it because of its complexity and the perception of high risk. In non-technical terms, this helpfully illustrated guide demystifies the options markets, distinguishes the imagined risks from the real ones, and arms investors with the facts they need to make informed, profitable decisions.

Carefully weaving examples, charts, and key points into the text, the book gives readers the skills to master the complex world of options, and also covers all the fundamental jargon and concepts.
- Updated to include commentary on the current market and the growing importance of options as an investment vehicle
- Another new addition to the successful "Getting Started In" series by Michael C. Thomsett
- The perfect introductory guide to options for investors at any level of experience

For anyone who wants to invest in options but needs a straightforward and easy-to-read guide to the subject in order to do so, Getting Started in Options is a must-read.

Acknowledgments vii

Element Key ix

Introduction xi

Chapter 1: Calls and Puts: Defining the Field of Play 1

The Call Option 12

The Put Option 30

Option Valuation 36

Chapter 2: Opening and Tracking: How It All Works 51

A Note on the Expiration Cycle 56

Opening and Closing Option Trades 58

Calculating the Rate of Return for Sellers 63

Chapter 3: Buying Calls: Maximizing the Rosy View 73

Understanding the Limited Life of the Call 74

Judging the Call 79

Call Buying Strategies 84

Defining Profit Zones 97

Chapter 4: Buying Puts: The Positive Side of Pessimism 107

The Limited Life of the Put 109

Judging the Put 116

Put Buying Strategies 124

Defining Profit Zones 134

Chapter 5: Selling Calls: Conservative and Profitable 141

Selling Uncovered Calls 144

Selling Covered Calls 158

Calculating Rate of Return 165

Chapter 6: Selling Puts: The Overlooked Strategy 173

Analyzing Stock Values 177

Evaluating Risks 180

Put Strategies 181

Chapter 7: Closing Positions: Cover, Close, Exercise or Roll 199

Defining Possible Outcomes of Closing Options 199

Exercising the Option 201

Timing the Decision 209

Avoiding Exercise 214

Chapter 8: Paper Trading: A Test Run of the Theory 231

The Case for Paper Trading 233

Two Sites Worth Checking 236

Proceeding with Paper-Trading Plan 239

Chapter 9: Calculating the Return: A Complex Aspect to Options 243

Finding a Realistic Method 244

Annualizing Models and Guidelines 246

An Overview of Basic Calculation for Calls 250

Anticipating the Likely Return 255

Glossary 263

Recommended Reading 279

About the Author 281

Index 283

MICHAEL C. THOMSETT has written more than seventy books on investing, real estate, business, and management. He is the author of several Wiley books, including the previous editions of the bestselling Getting Started in Options, as well as Getting Started in Fundamental Analysis, Getting Started in Real Estate Investing, and Getting Started in Swing Trading. He contributes articles to many websites, including Minyanville Media and TradingMarkets.com as well as investor-oriented magazines such as BetterInvesting and the AAII Journal.

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