Customer Reviews

Investing Without Fear: Options

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Harvey Friedentag, a Denver-based registered investment adviser, has done all investors a favor. In writing this book, he clarifies many of the misunderstandings that surround the world of listed investment options.

Too many consider the use of investment options as another form of gambling. This impression remains, despite their ability to minimize portfolio risk, diversification while maximizing capital gains, income and downside protection.

This well-written book is not for beginners, the author cautions. Rather, it is for experienced investors who have been unsuccessful; those who have made either small gains or, worse, lost money. This easy-to-understand book provides grounding in investment options. It begins with definitions. Then, it proceeds to strategy and tactics. The chapter on taxes is worth the book's price.

"Fear always springs from ignorance," Ralph Waldo Emerson once wrote. Those words ring true in the investment world. By penning this book, Friedentag has gone a long way to alleviate much of the misunderstanding that surrounds options strategies.

I had to read this book after it was recommended by Alexander Elder. This is a great little book in its simplicity of how to use covered calls to maximize profits in the stock market.

The author manages a multi-million dollar portfolio and has for a couple of decades so obviously he knows what he is talking about. These are not academic theories, this is what he uses professionally to manage others money. That is no easy task.

He believes that the money makers in options are those who sell them. This is not always true, so you need to follow the system in this book to give yourself a high probability to sell options and make money. A sharp trend up or down can quickly bring the buyer into the winners circle over the seller. Over the long term though the seller wins through time decay, by selling calls over and over again on the right stock.

The underlying stock you write an option on is the key. That is where your risk lies, in the stock going down not in the option going up. When you sell a covered option you collect the premium. The author suggests building a diversified portfolio of 10-20 stocks that you believe are great investments and write covered calls against them. You can write out of the money calls and use them as a price target or write 3 month out in the money calls over and over to collect the premium with additional downside protection.

He likes to use market crashes to scoop up shares at great prices for long term call writing. He uses the covered call right because it increases your odds of success greatly.

1. If the stock goes up any amount, you win.(You profit from the increase plus the call premium).
2. If the stock stays the same, you win.(You keep the call premium)
3. If the stock goes down less than the call premium you win. (You profit from the difference in the premium versus the amount it went down).
4. You only lose when the stock goes down more than the premium you collect.

This book's investment system is solid, I am sure over the long term Mr. Friedentag has produced great returns on his portfolio.

I would only warn the reader about a few things before they begin this investing program.

Covered calls are equivalent to naked puts, you take on the full downside risk of the stock for a small premium, if they are sold in the money, you also get none of the upside like naked puts. The key is picking the best stocks. With the recent financial sector meltdown, the Goldman Sach's scandal, and the BP disaster it is possible to lose a lot of money quickly. That is why he advises to diversify. Also this system was probably a disaster in 2008 and the beginning of 2009. Even with the continuous selling of calls into a down trend and using them like a parachute I am sure the losses were large. This system will have losing years, it wins over the very long term through discipline. You must follow this system long term to see the benefits.

Excellent book on covered calls.

I read the book in just a few days. Since then I have gone over it again. It was very insightful. The concept of Option hedges makes investing a little more predictable. I have been using this process in my trading. In 1 month I have had a 9% return so far. Not amazing, but consistent and dependable.

THIS BOOK IS AN EASY READ, WRITTEN BY AN INVESTMENT ADVISOR THAT KNOWS WHAT HE IS DOING. I NO LONGER HAVE FEAR TRADING STOCKS AS I ALWAYS HAVE OTHER INVESTORS MONEY TO HEDGE MY POSITIONS. THE CHAPTER ON MARGIN IS WORTH THE PRICE OF THE BOOK. YOU CAN GET IT ON AMAZON.COM. THE BOOK HAS BEEN UPDATED IN APRIL 2003.

THIS EASY TO READ BOOK IS WRITTEN BY A SEC REGISTERED INVESTMENT ADVISOR. THE BEST PART IS THAT IT TEACHES THAT WHEN YOU INVEST YOU DO NOT WISH, HOPE OR PRAY. THESE DO NOT WORK AT ALL.
YOU WILL LEARN THAT THE PRICE OF A STOCK DOES NOT MATTER AS THE PRICE WILL ALWAYS VARY.

THE CHAPTER ON TAXS IS WORTH THE PRICE OF THE BOOK.

DR ALEXANDER ELDER AUTHOR OF COME INTO MY TRADING ROOM HAS SAID, "THIS IS A GEM OF A BOOK FOR SERIOUS OPTION WRITERS. MOST OPTION BOOKS DEAL WITH BUYING OPTIONS BECAUSE MOST BOOKS ARE WRITTEN FOR GAMBLERS."
OUR CLUB HAS MADE BIG MONEY IN THE MARKET DCOWNTURN AND WITH TAX-ADVANTAGED INVESTING. MEMBERS OF THE CONTRARIAN INVETMENT CLUB, DENVER COLORADO.