Customer Reviews

Increasing Alpha with Options: Trading Strategies Using Technical Analysis and Market Indicators (Bloomberg Financial)

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Increasing Alpha with Options by Scott H. Fullman, CMT (Bloomberg Press, $55)

Because options expire, investing using them is a lot like humor--timing is everything. Fortunately, in this book, one is not only introduced to options strategies such as writing covered calls, strangles, and straddles, but is shown how to use basic technical analysis to determine the direction, magnitude, and speed of the underlying stock changes and thus the appropriate option contracts to capitalize on the expected stock price movement. More importantly, he goes on to spell out the risks involved and shares valuable rules of thumb from his 30+ years in financial services.

Mr. Fullman's book not only spells out the basics of options and technical analysis, but also shows how options can be used to hedge exposure in the real world to create positive alpha--performance better than that of the overall market. It should find a broad audience among pension fund, endowment, and hedge fund managers who seek to maximize returns while reducing risk. For individual investors seeking to earn better returns than a buy-and-hold strategy offers without taking on undue risk, it opens the door to a rich set of possibilities.

Both experienced and novice options investors will find the tables comparing various strategies for achieving an investment objective instructive. These tables compare the net cost, capital requirements, upside potential, downside risk, and break-even for strategies designed to accomplish the same objective, e.g., a bullish investment in a stock. By ranking each alternative strategy--long call, bullish call spread, bullish ratio spread, bull spread with short put, or outright purchase of the stock--investors can determine which strategy is most robust given their risk/reward preferences.

Michael J. Ham, CFA

As an options trader with a bent on using technical analysis coupled with trading events (earnings, splits, economic reports, etc.) I was excited to try this book, as the title made me believe that it was right up my alley. However, unlike most other options books that I've read, I learned very little from this one. Fullman skims the surface on all subjects - options, technical analysis, and more, without offering much insight into any of them.

Increasing Alpha With Options is a must for your reference library if you utilize covered call strategies with your investments. The book provides a unigue view of employing covered calls as a conservative investment tool. I own Mr. Fullman's first book, and I am amazed at his skill in explaining the use of options as an investment tool in explainable terms for every reader in his latest book.

This books was well worth my time and the knowledge here was exceptional. Covered alot of interesting risk management strategies that I always felt was for the select few. The book audience seemed very much written to fund managers, which added to its validity.