Customer Reviews

Exit Strategies for Covered Call Writing: Making the most money when selling stock options

5 star:		(18)
4 star:		(3)
3 star:		(1)
2 star:		(2)
1 star:		(1)

 

 

I am a covered call seller, and I do appreciate any books on the subject, because, relatively speaking, there are not many. I've also read Ellman's blog, and he has some interesting and smart things to say about covered calls.

All that being said, however, I'm not sure what to say about this book. If you're a covered call seller with any experience, chances are you know all of the concepts in this book already. We deal with these concepts every day. I learned nothing new.

But even if you're a beginner, some of the material is simply too rudimentary for inclusion in a book of this type. For example, do we really need a chapter devoted to placing an online trade (Chapter Nine): "1. Go to your online brokerage account. 2. Hit the place trade link." And it goes on from there. I mean, seriously. If you can't find the "place trade" link, should you really be messing around with options?

Also, about half of the book is taken up by charts that don't really need to be there; they look like filler to me (in all fairness, this isn't the first options book to do that). My other pet peeve is Ellman's overuse of "simple analogies" to explain simple arithmetic, such as the references to "if your neighbor's height is 84 inches, and then he's 87 inches," and the like, and the overuse of the "hitting a triple" metaphor. The folksy element could have been dialed down a bit.

Possibly the only use for this book is for beginners to read about the real-life examples of what can happen to covered positions and what can be done with them. Perhaps that's enough. Therefore, probably worth the price and the time. But as I said, not bad, but not great either.

North Pole seems to believe that Alan Ellman's covered call books are supposed to be magnificent technical tomes regarding option pricing, timing and selection. That is not what they are intended to be. If you want a detailed discussion of Black-Scholes analysis there are many other books out there. If you don't know what Black-Scholes is, then this book may be just what you are looking for.

There is a reason why the cover says "Blue Collar Investor", instead of "White Collar Investor". These books are for the basic stock investor. They leave out a lot of technical jargon which average investors just ignore anyway. I am a certified public accountant. I have been trading options for more than 30 years. I have found Alan's method of picking stocks to be one of the most helpful investment tools I have ever read. Exit Strategies was written because many of his students, nearing expiration dates, emailed requests to Alan asking, "What should I do now?". This book attempts to give some guidance to the blue collar investor in this regard.

If you are a Wall Street trader, stock broker or hedge fund manager it probably isn't for you. Yes it is simplistic. That is it's purpose. It is intended to bring what passes as a complex trading strategy down to earth for the small investor who doesn't have $500,000 to invest with some genius who will turn it into $350,000. So, take North Pole's advice. If you are looking for an insomnia cure explaining the precise reason for an option's price at 1:38PM on Tuesday, this is NOT it. If you want a helpful, easy to read, and understand, book on covered call writing, then buy Alan Ellman's books.

Disclosure: I built the Excel option calculator which Alan distributes to his students. It was designed to be simple and easy to use and understand. No, I do not receive anything from the sale, or my endorsement, of his books.

I have been trading stock equities for over 15 years and options have always been some mysterious and unknown aspect of the stock market.

About 10 years ago, I looked at Options trading, but it was a big convoluted world that was very intimidating, and very expensive to obtain knowledge, or to pay for 'newsletters', etc

In the last year or so, I stumbled upon some online discussions about Options trading and searched on the internet for more info, and then at Amazon to see what books are out there, as well as to read others recommendations/reviews.

'Exit Strategies for Covered Call Writting' showed up. I read the reviews and decided to make the purchase.

All I can say is I wish I had this book 15 years ago as it totally repaints the picture of stock trading & Options for me.

The author breaks the covered call options writing strategies into easily understandable concepts and illustrates each concept with an equally understandable examples to help reinforce your understanding.

This book helped me gain confidence in my understanding of the covered call options market and illustrates how covered call options trading is quite conservative as opposed to the high risk exotic options trading.

Note, this book does not cover exotic options trading, only covered call writing and 'exit strategies' on how to handle a variety of issues the might come your way, such as if underlying stock goes up, goes down, goes sideways.

If you are of the mentality of 'buy & hold' for stocks and you are not selling covered calls, you are leaving easy money on the table. Hundreds or thousands can be made each month off of the stocks you are already holding.

This book is also great for people that watch individual stocks and feel comfortable about what to expect in how much a stock can go up or down in a short period of time.

Are you down on a current stock investment? Covered call options can reduce your cost basis for the underlying stock so as to help reduce the pain of a stock loss, help break even, or yes, even make a profit on a stock that you are currently underwater with.

You can write covered calls for regular stock broker accounts, or even IRA accounts.

This book is a great investment. I easily recouped the cost for this book and more with my first options cycle that expired in October of this year.

Last point, this book has been a great primer into the entire world of options. While this book only covers covered call writing, it has given me the foundation to understand the 'exotic' option world and allows me to see what the risk is as well as the rewards of options trading...so I can tell you the difference between a straddle & a strangle!

Good luck!

Before buying this book, check out the author's website at thebluecollarinvestor. This is the author's second book (I have not read the first one). From what I can tell in the first book the author explains: how options work, how to pick stocks to sell call options on, how to use technical analysis for both stocks and the market, and risk management. But this is the second book, basically the author lays out a strategy in 3-4 pages, then gives you 80-90 pages of examples (mostly stock & option charts) with a little bit of comentary at the bottom of each example. If you sell a thirty day option for $1., and can buy it back for .20-.10 in the first few weeks you should do that. I really did not need 120 pages to figure that out.

I have noticed some unfair critisism of this book. Well I havent come to set the record straight, but rather to give an honest opinion from someone who actually trades covered calls...

1. This book is written in 'easy to understand' language. This is definetly an advantage as I have read many stock market books where its filled with crazy jargon which can make it frustrating. Not 'exit stratergies'.

2. Its VERY thorough in its exploration of exit stratergies... Just some of the key topics included are:
* Key parameters to consider before expiration friday
* Key parameters to consider on or near expiration friday
* Exit strategy alternatives prior to expiration friday
* Exit stratergy alternatives on or near expiration friday
* Real life examples prior to expiration friday
* Real life examples on or near expiration friday

3. This book will save you plenty of time trying to figure things out for yourself. Seriously, if you were to try figure this out for yourself, it would take plenty of practice, experience and more than likely mistakes along the way. Mistakes in the market can cost $$$. But, after reading this book youl see more possibilities with earning cash in the stock market, that are very simple and easy to understand.

4. Calculations. This is a scary word for some people because they HATE doing the maths. But this book gives access to a very unique calculator that you just plug in the numbers and automatically youl find out what your profit income will be. I use this calculator all the time and its just amazing.

5. This book shows you how you can sell a call on the same stock not just once, BUT TWICE, in the same contract period!

6. This book will show you how to limit your losses in the market DRAMATICALLY. And not only that, but it will show you how to turn those losses into gains... Yes, it gives actual real life examples of all this...

7. One final note, this book is really for those who want to or who are selling covered calls. I personally bought this book along with 'Cashing In on Covered Calls'. First I read CIOCC, then I read this one. This book is the sequel. But, if you already understand all about covered calls you could probably just read the suequel (Exit Strategies). WARNING!!! There are literally thousands of stocks to choose from when selling covered calls. NOT all of these are good candidates. Some would be terrible candidates. If you want to sell covered calls on good stocks but arnt too sure which ones, you really should read Cashing In On Covered Calls.

8. Althugh this book may not have the excitement of a Stephen King book (what non fiction book does?),its still enjoyable to read AND it will reward the people who take action.

I could go and on and on, but all you have to ask yourself is this
Q: Do you want to make money in the stock market?
Q: Do you want a system that easy to follow?
Q: Do you want to make money every single month?

If you anwsered yes, then you should seriously consider this book...

All in all , I gave this book 5 stars. By the way, one last thing, I paid $20 for this book, but in 2 months using the information, I made my money back. But more rewardingly, Ive made back 10 fold what I paid for it. All in 2 months...

Most books on the subject are written by Phd. mathmaticians and are so complicated even an experienced trader can't understand them. There is however a little to much basics like the dictionary which can be downloaded from many places. His first book was far better.

I wish I had read this book much earlier. I had been leaving money on the table. Worth its weight in gold.

This is the second book from this author.
It is more aimed to the beginner or the ones who don't want to follow the markets day in and day out.
It discusses what to do when you currently have a covered call position (explained in his first book), depending on what happens to the stock ("the risk is in the stock, not in the option").
For example : if the stock plunges, buy back the calls and sell other ones with a lower strike. The rules are clearly defined and detailed (depending on time left to expiration, premium erosion, etc ...), the book is easy to follow, although there is a lot of filler.
What I like about this book is the "adjustment" process : if a stock plummets, you can recoup a large loss, and even break even on the trade, if you apply a good defense. It is in no way a definitive guide, the author will for example never tell you to buy puts, using the process from selling calls(to keep things simple I think), but it helps nonetheless because it points in the right direction and gives you food for thought.

If you're totally new to this strategy, the book can help you see what can happen and gives clear guidelines.
If you're already selling calls, chances are you already know everything inside, and you may probably already have found your own rules, that may differ from what the author suggests.

All in all, a very basic book, aimed to the lay person ... an advanced trader may feel cheated, but every one could make real good money with it, or at least loose less when stocks go south ... it may be simple, but the information is vital !

This is a good follow up to the first book. It's not that useful unless you have read the first book. The author does tell you that the first book tells you how to enter into covered calls and that this book explains the exit strategy. I'm not sure why he didn't put all of it into one book, but overall I would call this a good read even if it is a little simplistic.

This is a great book for covered call writers. It explains in a very simple way the logic behind different exit strategies.