Getting Started in Options, Illustrated Edition
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.
Element Key ix
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
Recommended Reading 279
About the Author 281
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.
Wiley's best-selling Getting Started In Series has been given a facelift! This new edition will be presented in two formats: Illustrated print format and Illustrated e-book formats.
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 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 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.
This book is now available for purchase online in print and all e-book formats. For a list of retailers, visit http://www.wiley.com/buy/9781118399309.