Customer Reviews

Get Rich With Options: Four Winning Strategies Straight from the Exchange Floor (Agora Series)

5 star:		(29)
4 star:		(22)
3 star:		(13)
2 star:		(5)
1 star:		(8)

 

 

I'd give this book 5 stars for its practicality, but there are a few flaws. Many options books present a Chinese menu of exotic strategies, confusing the reader and probably causing him to lose his money quickly. This book distills all of these strategies down to 4 of the ones that are the most practical for investors and traders, and that in my experience work well in real life. I was put off by the awful title, which is not the main point of the material in the book at all, but I guess the publisher wants to attract some of the get-rich-quick crowd. The clarity and emphasis are uneven. The fifth "bonus strategy" would've best been left out, because most traders would consider it extremely dangerous. On balance, the book's emphasis on profiting from option time decay by using stragegies that are safer than stock ownership greatly outweighs these flaws. You can waste thousands of dollars on options classes and end up with less useful material than is contained in this book.

This book cuts to the chase in presenting four winning options strategies (see book description above for all 4, which you can lookup), which will make beginners happy as there's too much confusing options advice out there. But it falls badly short on two absolutely critical aspects of trading: exits, and position sizing (or money management).

For example, Lee presents option credit spreads as his favorite strategy, and it's certainly a powerful strategy, but of his 13 example spread trades, not one was a loser, or close to a loser! There's very little treatment of when and how to get out, nor how many spreads to put on given one's capital - areas where I really wanted to hear his analysis, because he has survived in the markets for a while. That's a huge deficit, because the potential risk:reward ratio of spreads is usually at least 4:1. So even though the odds of a winning trade can be greatly in your favor, the overall expectancy (read Van Tharp if you don't know what expectancy is) can kill you. You still need a plan to get out or at least hedge losses, and this book has little to say about that.

Also, implicit in his book is that you're already good at technical analysis and can make market calls with accuracy better than chance. So, you need an overall working strategy before you enlist the specialized options tactics he presents.

In the end, this book's value comes in telling you what really works for options, but not in sufficient detail that you can make a living at it. So start out small, and check out sites like elitetrader where people with experience can share things like exits and position sizing for spreads and other options positions in greater depth.

This book is a rare read in that it is very simple to understand, yet provides all the insight into the complex options trading world. It takes very complicated ideas and makes it simple for all who read the book. You will thoroughly enjoy reading this book and it will enable you to understand a sometimes hard to understand subject-the world of options. I have taken the authors ideas and simulated some options trades and they have worked. Next step is the real thing!! I would recommend this book as a very quick and simple read. If you want to understand the world of options, this book is for you!!!!

I picked this book up a month back and tried to implement some of the strategies. The author is right in that Option Selling is the key as I have seen option buying just expire worthless (except Deep in the Money calls).

Pros of the book:-
1) Boils down the strategies to 4 key ones. It's simple and doesn't overwhelm the new option trader with the innards of the "greeks", how options are priced etc.

2) Another benefit is that it points to good tools to use while analyzing your positions. Dont ever trade without the "tools of the trade".

Cons:
1) No strategy on how to pick the trade - There are many examples that is right in hindsight but not enough explanation on why he chose that trade in the first place. No example on when things went wrong. I think that's key to really making money in options...how to pick the right trade to put in else you will just burn yourself.

2) No options repair strategies - Ties in with the 1st comment. If the trade you put in went against you, how to repair it. Author does mention rolling up but there is not enough explanation for someone new at options on how to do it.

So how to overcome the cons.... buy some more classic books to round out your knowledge.

For the intermediate options trader, "McMillan on Options" by Lawrence McMillan is a good buy. Goes deeper into why and how options work and covers all the strategies here.McMillan on Options, Second Edition (Wiley Trading)

For advanced option information, check out Option Volatility & Pricing: Advanced Trading Strategies and Techniques by Sheldon Natenberg.Option Volatility & Pricing: Advanced Trading Strategies and Techniques

This book is not a good first book for people wanting to start trading options for the first time. However it is excellent for those that have already read a few books on options and understand the basic principles of how they work.
This book explains the importance of not thinking of only buying calls and puts, but also the danger of wasting your money on deep out of the money options that have no intrinsic value and do not even move in your favor even when you are right about the stock. He also explains briefly how delta works with option price movement as it correlates to the stock, a .50 delta means the stock moves half a much as the stock, a 1.00 delta means the options move completely with the underlying stock. The Theta is also covered which is a measurement of how fast the option value deteriorates in relation to time. I found two of the web sites the author suggested to be great for option information. One has an option calculator where you simply key in the option information and it gives you the options value along with the Greeks. Another shows you the probability of an option reaching your target price before it expires.
The book basically gives you four strategies that tilt the odds in your favor for winning with options while at the same time controlling risk.

#1 Deep-In-The-The-Money call strategy: If you want to use options to participate in the up trend of a stock then buy deep in the money calls that move equally with the underlying stock so you can profit along with the stock holders. You want a delta of at least .90. These options only cost about 50% of what the stock costs and you get 90% of the movement, that is a great deal! Stay away from deep out of the money calls they are like lottery tickets with little chance of being worth anything at expiration. This advice alone is worth the price of the book.

#2. Sell Puts: Instead of putting in limit-buy orders for stock you want to buy sell Naked Puts on hot stocks you want to buy when they pull back. Support or 50 day moving averages are a food target price to use to sell your Puts. Only do this on up trending stocks that you want to own.

#3 Option Credit Spread: This strategy has a limited risk and limited return feature. It takes advantage of the time decay factor. It entails the buying and selling of the same amount of options as a single transaction for a single price at the same time. They are done at different strike prices and are either both call or both put options. You will be selling the more expensive of the two options, which will yield cash credit to your account. Then you will buy the less expensive one. Your profit is the difference you made on the one you sold versus the less expensive one you bought.

#4 Covered Call: Put stocks that you plan on holding long term to work by selling covered calls on them. Sell your calls out of the money and at prices you would be happy to sell the stock for. Sell the calls above price resistance to avoid it being called. This creates a nice income stream.

"Don't be under the impression that picking a market direction and being right on it is the only way to profit." Options gives us many, many ways to make money. With only 12% of options being assigned and used, if you sell instead of buy you should average 88% wins. I highly recommend this book for option traders ready to go the the next level beyond simply being buyers of options and puts to sellers of options and profiting from theta. Be the casino not the gambler.

This book certainly delivers on its claim to give you four winning options strategies that are both conservative and easy to understand. However, the main strategy was illustrated by numerous commodity optioins trades that the author actually executed historically as verified by his including brokerage statements for the individual trades. I am primarily a stock options trader. Although the same principles can be used with stock options as with options on commodity futures there are some differences. For instance, his favorite trade in commodities is a seasonal trade on soy bean futures options. This play depends on the high volatility of the OTM options at certain times of the year. It might take a little more work to figure out the volatilities for stock options since stocks usually don't have seasonal variations in volatility.

One stategy did apply only to stocks. He suggests selling slightly OTM puts on a stock that you want to own. If the put is assigned to you, you get the stock at a slightly lower price plus the cost basis is further reduced by the amount of the premium you got for selling the put.

I'd recommend this book to anyone that has traded a few options in their past. The title sounds hokey but I skimmed thru the book at the bookstore and decided to buy it from Amazon. The strategies, writing style, and explanations from the author are outstanding. He shows you some solid strategies, explains them thoroughly, and looks at the trade from every conceivable angle so you'll know what your maximum profit or loss might be. He also show you how he computes and uses probabilities before he selects an option to trade. I got a lot out of the book and am paper trading his strategies as I write this. +++

This book is fun to read but in no way should be considered complete. I think the perspective and concepts are refreshing compared to most other books on options. However, my advice for any would-be serious options trader is to cross reference these strategies with a more authoritative and copmplete guide to options such as McMillans's 'Options as a strategic investment'. You will actually find a better alternative to this book's recommendation to buy deep in the money calls. The credit spread inforamation was insightful because it uses examples of commodities which most traders are probably unaware of, but seem to have better premiums than the often paltry amounts found with index options. I think this book would be very enlightening to a beginning options trader and offer some good ideas to the intermediate trader.

Having read many books on the subject of options, I find this to be one of the simplest and easiest understood books on the subject. It is a great options book to start out with. For a more in-depth treatment, readers would be well-advised to read The Bible of Options Strategies: The Definitive Guide for Practical Trading Strategies.

The strategies set forth in this book are simple, reasonably low risk (as far as that can be said for options strategies) and effective. These strategies can also be very profitable. I have used them all with success at one time or another.

While the book could be improved in a few spots (I particularly do not like the title), the ultimate question is whether this book can make you money. I believe the answer to that is an unqualified "yes." My review score is based largely on that fact. Don't expect that you are going to get rich *quickly* with options without taking on astronomical risks, despite the title of the book.

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.