Book Review - Get Rich with Options by Lee Lowell
Category Book Review
The majority of books I've read on investing in the stock market are focused on buying and selling of actual shares of stock. I vaguely know of options, using puts and calls to leverage blocks of stock for small amounts of capital. But Get Rich With Options: Four Winning Strategies Straight from the Exchange Floor by Lee Lowell does a good job in explaining how that all works, and how best to structure your option trading to incur minimal risk and maximum gain. It just takes a little bit to get past the "over the top" title...
Contents:
Part 1 - The Option Basics: It's All About the Calls and Puts; How Options Are Priced; Option Volatility; Stocks versus Options; Why Option Selling Is Your Key to Success
Part 2 - The Strategies: Buy All the Stock You Want for Half the Price; Getting Paid to Buy Your Favorite Stock; Option Credit Spreads - The All-Star Strategy; A Day in the Life of the Market Maker; Put Your Stocks to Work - Sell Covered Calls; A Bonus Strategy - Ratio Option Spreads
Part 3 - Getting Ready to Trade: Tools of the Trade; Brokers and Commissions
Conclusion; Index
Lowell has experienced the option trading life as both a member of a brokerage firm and as an independent trader. His experience comes into play in the book, as there are detailed analyses of some of his trades that illustrate the different strategies. Part 1 was perfect for someone like me who has heard of options, and perhaps knows the bare basics, but doesn't understand why and how they are priced. Now all those things like volatility and deltas make sense. Part 2 is where he gets into the strategies he uses to buy and sell options. A couple of them are pretty easy to understand once you have the basics down (like the covered calls). In fact, it's hard to imagine why more people don't do that. A few seemed more complex and confusing, such as the ratio option spreads. Perhaps with a few more readings, it might have sunk in. But I'm not sure I was prepared by the end of the book to execute those strategies...
The main knock I have against this book is that everything's successful and works in his examples. He's pretty clear as to where the risk lies in each of the strategies. And it's easy to see how options *do* mitigate your potential loss risk while giving you a much better chance of walking away with some profit. But unless you're trading thousands of option contracts with plenty in your brokerage account to cover your exposure, the average trader is going to be walking away with a few hundred or so in profit from these techniques. Not quite "rich", but far better than watching your stock plummet or stagnate over the years. And I *really* would have liked to see him show some of the trades that *didn't* go well. He alludes to nothing being perfect or a sure bet, but you certainly won't see him dwell on the imperfections here...
Overall, this is a good book that covers a complex topic in an understandable fashion. I would have preferred a bit less hype and salesmanship, but it's not so bad as to detract from some good information and advice.
The majority of books I've read on investing in the stock market are focused on buying and selling of actual shares of stock. I vaguely know of options, using puts and calls to leverage blocks of stock for small amounts of capital. But Get Rich With Options: Four Winning Strategies Straight from the Exchange Floor by Lee Lowell does a good job in explaining how that all works, and how best to structure your option trading to incur minimal risk and maximum gain. It just takes a little bit to get past the "over the top" title...
Contents:
Part 1 - The Option Basics: It's All About the Calls and Puts; How Options Are Priced; Option Volatility; Stocks versus Options; Why Option Selling Is Your Key to Success
Part 2 - The Strategies: Buy All the Stock You Want for Half the Price; Getting Paid to Buy Your Favorite Stock; Option Credit Spreads - The All-Star Strategy; A Day in the Life of the Market Maker; Put Your Stocks to Work - Sell Covered Calls; A Bonus Strategy - Ratio Option Spreads
Part 3 - Getting Ready to Trade: Tools of the Trade; Brokers and Commissions
Conclusion; Index
Lowell has experienced the option trading life as both a member of a brokerage firm and as an independent trader. His experience comes into play in the book, as there are detailed analyses of some of his trades that illustrate the different strategies. Part 1 was perfect for someone like me who has heard of options, and perhaps knows the bare basics, but doesn't understand why and how they are priced. Now all those things like volatility and deltas make sense. Part 2 is where he gets into the strategies he uses to buy and sell options. A couple of them are pretty easy to understand once you have the basics down (like the covered calls). In fact, it's hard to imagine why more people don't do that. A few seemed more complex and confusing, such as the ratio option spreads. Perhaps with a few more readings, it might have sunk in. But I'm not sure I was prepared by the end of the book to execute those strategies...
The main knock I have against this book is that everything's successful and works in his examples. He's pretty clear as to where the risk lies in each of the strategies. And it's easy to see how options *do* mitigate your potential loss risk while giving you a much better chance of walking away with some profit. But unless you're trading thousands of option contracts with plenty in your brokerage account to cover your exposure, the average trader is going to be walking away with a few hundred or so in profit from these techniques. Not quite "rich", but far better than watching your stock plummet or stagnate over the years. And I *really* would have liked to see him show some of the trades that *didn't* go well. He alludes to nothing being perfect or a sure bet, but you certainly won't see him dwell on the imperfections here...
Overall, this is a good book that covers a complex topic in an understandable fashion. I would have preferred a bit less hype and salesmanship, but it's not so bad as to detract from some good information and advice.
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