The Bible of Options Strategies: The Definitive Guide for Practical Trading Strategiesby Guy Cohen
Pub. Date: 04/07/2005
Publisher: FT Press
"Guy Cohen is the master when it comes to taming the complexities of options. From buying calls and puts to iron butterflies and condors, Guy explains these strategies in a clear and concise manner that options traders of any level can understand. His chapter on options and taxes is especially welcomed (and needed). The Bible of Options Strategies is a/i>
"Guy Cohen is the master when it comes to taming the complexities of options. From buying calls and puts to iron butterflies and condors, Guy explains these strategies in a clear and concise manner that options traders of any level can understand. His chapter on options and taxes is especially welcomed (and needed). The Bible of Options Strategies is a straightforward, easy-to-use reference work that should occupy a space on any options trader's bookshelf."
–Bernie Schaeffer, Chairman and CEO, Schaeffer's Investment Research, Inc.
"The author delivers clarity, insight and perception making learning about options a joy, and practicing the art of making money that much easier: truly a bible from a guru."
–Alpesh B. Patel, Author and Financial Times Columnist
"Guy Cohen truly makes learning about options easy in this fact-filled guide. Bullet points make for a quick and enlightened read, getting to the heart of what you really need to know about each options strategy. This book is a must for any serious trader's library."
–Price Headley, Founder, BigTrends.com
Pick the right options strategies...implement them step-by-step...maximize your profits!
Introducing today's first and only comprehensive reference to contemporary options trading!
OptionEasy creator Guy Cohen identifies today's popular strategies...and tells you exactly how and when to use each one and what hazards to look out for! It's all here....
- Basic Strategies including
Buying and shorting shares, calls, and puts.
- Income Strategies including
Covered Call, Naked Put, Bull Put Spread, Bear Call Spread, Long Iron Butterfly, Long Iron Condor, Calendar Call, Diagonal Call...
- Vertical Spreads including
Bull Call Spread, Bull Put Spread, Bear Call Spread, Bear Put Spread, Ladders...
- Volatility Strategies including
Straddle, Strangle, Guts, Short Butterflies, Short Condors...
- Sideways Strategies including
Short Straddle, Short Strangle, Short Guts, Long Butterflies, Long Condors...
- Leveraged Strategies including
Call Ratio Backspread, Put Ratio Backspread, Ratio Spreads...
- Synthetic Strategies including
Collar, Synthetic Call, Synthetic Put, Synthetic Straddles, Synthetic Futures, Combos, Box Spread...
...and many more strategies...
Plus essential tax-saving information, and more!
- No other book presents this much authoritative, current information on options trading strategies
- Covers all of today's best income, volatility, leveraged, synthetic, and sideways market strategies
- Discover why each strategy works, when it's appropriate, and how to use it—step by step
- Includes a full chapter on tax issues associated with options strategies
- By Guy Cohen, whose OptionEasy application has helped thousands of traders achieve breakthrough results!
The Bible of Options Strategies is the definitive reference to contemporary options trading: the one book you need by your side whenever you trade.
Options expert Guy Cohen systematically presents today's most effective strategies for trading options: how and why they work, when they're appropriate, when they're inappropriate, and how to use each one responsibly and with confidence. The only reference of its kind, this book will help you identify and implement the optimal strategy for every opportunity, trading environment, and goal.
© Copyright Pearson Education. All rights reserved.
- FT Press
- Publication date:
- Product dimensions:
- 7.20(w) x 9.30(h) x 1.20(d)
Table of Contents
About the Author xxxiii
Introduction to Options 1
Trading with the OVI 27
Chapter 1: The Four Basic Options Strategies 41
Chapter 2: Income Strategies 63
Chapter 3: Vertical Spreads 143
Chapter 4: Volatility Strategies 177
Chapter 5: Rangebound Strategies 249
Chapter 6: Leveraged Strategies 297
Chapter 7: Synthetic Strategies 321
Appendix A: Strategy Table 383
Appendix B: Glossary 393
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I have read the book 'The Bible of Option Strategies'. It is a good book. However there are many mistakes in the book which could have been avoided by good editing. The examples are given below. In page 57 section 2.9 Calendar spread there is some mistake. The author writes about assignment of call sold at strike 30 bought for$2. When share flares up to 40 and assignment takes place he loses 10-2 =8 when he sells the share at 30 after buying it at 40. In the book author says that the premium of 30 call bought will go up only by $5.It is wrong. It will go up at leasst by $10 Suppose the trader paid $3 for that call.By the time share price flares to 140 it will have an intrinsic value of 10 and its premium will be at least above 10. He gains a profit of $7 from that call. His net loss will be $1. Page section2.9.3, 59 last paragraph "Your maximum risk on the trade itself is limited to the net debit of the bought call less the sold call" Page 60, 2.9.4 risk profile last sentence "Any substantial move up or down is dangerous for the position" The risk profile chart shows unlimited losses. On the one hand the author says that there is a limited loss and on the other hand he says there is unlimited loss. This seems to be a contradiction Page 68, section 2.10.6 example 2 Long call has a premium of 5.46. It was bought at 6.60. Therefore the loss is 1.14. Net loss is 1.14-0.55=0.59 and not 0.61 Example 3 Long call seems to have a premium of 7.09. It was bought at 6.60. Hence selling it will yield a profit of 0.49 and not a loss of 0.49 Taking profit from 27.5 call option sold at 0.55 net profit is 0.55+0.49=1.04 and not 0.04 Example 4 Premium on 20 strike call for example 3 and 4 are given as the same at 7.09. Premium on this case must be greater than that of example 3. The premium must be corrected to 7.64. Then pr0fit from the call becomes 7.64-6.60=1.04. Net profit will be 0.55+1.04=1.59 and not 1.04. If share closes at 40, premium on the 25 strike call may be 17.05 yielding a profit of 17.05-6.60=10.45. Adding 0.55 to this will give 11. The loss on 27.50 strike call is 12.50. Therefore net profit in the case of the share moving much above the present place will tend to fall to zero. Therefore the characteristic is not that of a covered call. Net debit 0.85-1.40= 2.25. It should be 0.85+1.4=2.25 Page 147 4.5.7 Net debit 4.2-3.80=8. It should be 4.2+3.8=8 Section 7.60 Short call synthetic straddle page 263 Steps to trading a short call synthetic straddle 1 Buy the stock ( If trading US stocks sell 50 shares for every call contract you buy). It is wrong.It should be 'If trading US stocks buy 50 shares for every call contract you sell') Section7.7 Short put synthetic straddle. Page 269 Steps to trading a short synthetic straddle 1. Sell the stock (if trading US stocks sell 50 shares for every put contract you buy). This is wrong. It should be sell 50 shares of stock(if trading US stocks sell 50 shares of stocks for every put contract you sell) 2. Sell two ATM calls per 100 shares you buy. This is wrong. It should be 'sell two ATM puts per 100 shares you sell' 3. Page 271 Net credit= 35.07-2.5=37.57. It is wrong Net credit is 35.07+2.5=37.57 Break even points given are wrong Lower break even point is 32.43 instead of 32.57 Higher break even point is 37.57instead of 37.43 The biggest draw back of this book is that it does not give any idea about the probability of profits and loses Cy