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

  • ID: 2216238
  • Book
  • April 2013
  • 284 Pages
  • John Wiley and Sons Ltd

Investing in options can be very lucrative, but many shy away from it because of the perception of complexity and high risk associated with this endeavor. In non–technical terms, Getting Started in Options, Illustrated Edition skillfully 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.

Engaging and informative, Getting Started in Options, Illustrated Edition truly lives up to its name by bringing the key concepts of this topic to life through attractive illustrations, charts, and graphs. Along the way, it carefully weaves these visual components with definitions, examples, key points, and links to websites that will further expand your options knowledge base. Filled with in–depth insights and practical advice, this reliable resource:

  • Explores how to use options as a tool to expand control over your portfolio, protect positions, reduce market risk, and enhance your current income
  • Features illustrated comic strip panels at the conclusion of each chapter, which highlight major points and provide an entertaining, but informative running narrative throughout the book
  • Covers the essential attributes of options from striking price and expiration date to type of option and the underlying stock
  • Outlines effective options strategies involving buying and selling calls and puts
  • Discusses how to calculate options returns, "test run" activities to try out new theories, and much more.

Internet access and lower costs have combined to bring options to anyone and everyone who wants to use this effective investment vehicle. Let Getting Started in Options, Illustrated Edition show you how to make the most of them.

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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

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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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