Options Trading for the Conservative Investor: Increasing Profits Without Increasing Your Risk [Hardcover]

Michael C. Thomsett (Author)

Book Description

Publication Date: May 23, 2005

Written for investors who are concerned with preserving capital, maximizing predictability, and maintaining consistently strong returns, this resource reveals a narrow band of options strategies that can help readers improve results as they systematically reduce unnecessary risk throughout their portfolio.

--This text refers to the Paperback edition.

Editorial Reviews

From the Back Cover

Other copy "Every open-minded conservative investor should read this book."

–Lawrence G. McMillan, author of Options as a Strategic Investment

"The author's option trading guidelines include important issues often overlooked by investors. Attention conservative investors! Michael Thomsett's Options Trading for the Conservative Investor has hit a bulls eye...for you!"

–Marty Kearney, The Options Institute, Chicago Board Options Exchange

"Michael Thomsett has done a terrific job of showing how a conservative investor can use certain option strategies to his advantage. He spells out how that investor can utilize options to provide income, to protect stock holdings, or even as a substitute for stock itself. Every open-minded conservative investor should read this book."

–Lawrence G. McMillan; publisher, The Options Strategist newsletter; president, McMillan Analysis Corporation; author, Options as a Strategic Investment

"This book is a must for the diligent investor. Perfectly timed for these uncertain markets, Michael Thomsett provides a lucid guide for how to approach options trading conservatively, yet also focuses on the fundamental need for good returns and provides real examples throughout."

–Guy Cohen; author of The Bible of Options Strategies and creator of OptionEasy (www.optioneasy.com)

If you're an investor concerned with preserving capital, maximizing predictability, and maintaining consistently strong returns, your best solution just might surprise you: Options. In Options Trading for the Conservative Investor, Michael C. Thomsett reveals a narrow band of options strategies that can help you improve results as you systematically reduce unnecessary risk throughout your portfolio.

Thomsett, author of the global best-seller Getting Started in Options, writes in simple, nontechnical language, uses real examples, and guides you through every strategy–one easy step at a time. He's made this book simple and visual enough for any experienced investor to use, even if they have no experience trading options. Thomsett is also the author of Stock Profits: Getting to the Core (Financial Times-Prentice Hall 2004), The Leaps Strategist (Marketplace Books 2004), and Investment and Securities Dictionary (McFarland & Company 1986).

Thomsett systematically covers several options strategies optimized for conservative investors, including covered call writing on carefully selected stocks, contingent purchase strategies, and powerful "combination" strategies that produce cash to bolster current income. No matter how cautious an investor you are, this book will give you powerful new tools for achieving your financial goals–without losing a moment of sleep.

• Fundamental ground rules for conservative options investors

• What you should know and believe before you get started

• How options fit into your conservative trading strategy

• Deciding what stocks to buy or sell options on–and what to avoid

• Examples and case studies based on an actual model portfolio

• Practical guidance for leveraging each strategy with your own portfolio

• Practical "rescue" strategies

• Recovering your investments when market values have fallen

• How to take profits without selling stock

• Step-by-step techniques based on long puts and short calls

Improve Returns–Without Added Risk!

• Easy, step-by-step options strategies for increasing income and protecting capital

• Preserving your spending power after inflation and taxes

• Avoiding unacceptable market, liquidity, and diversification risks

• Protecting your profits without losing invested positions

• No options experience necessary!

• By Michael C. Thomsett, author of the worldwide best-seller Getting Started in Options, 6th Edition (John Wiley & Sons 2005)

The world's #1 options author has written the definitive options guide for conservative investors! One step at a time, you'll discover how to use options to increase yields, reduce risks, protect existing positions, and ride safely through any market down cycle. Want double-digit returns without heart-pounding risk? Here are the options you've been searching for!

© Copyright Pearson Education. All rights reserved.

About the Author

Michael C. Thomsett has written over sixty books on investment and financial topics, including Stock Profits: Getting to the Core (Financial Times-Prentice Hall 2004) as well as the best-selling Getting Started in Options (now in its Sixth Edition, with over 200,000 sold, John Wiley & Sons 2005) and The Leaps Strategist (Marketplace Books 2004). His Investment and Securities Dictionary (McFarland & Company 1986) was named Outstanding Academic Book by Choice Magazine.

Thomsett lives in Port Townsend, Washington.

© Copyright Pearson Education. All rights reserved.

See all Editorial Reviews

Product Details

• Hardcover: 288 pages
• Publisher: FT Press (May 23, 2005)
• Language: English
• ISBN-10: 0131497855
• ISBN-13: 978-0131497856
• Product Dimensions: 9.1 x 6.3 x 0.9 inches
• Shipping Weight: 1.4 pounds
• Average Customer Review: 3.5 out of 5 stars  See all reviews (23 customer reviews)
• Amazon Best Sellers Rank: #1,168,430 in Books (See Top 100 in Books)

More About the Author

I have been writing professionally since 1978 and fulltime since 1984. Previously, I was an accountant.
From 1978 to 1984 I wrote part-time and also was a consultant in the financial services industry. Once I began writing fulltime, I began in the magazine journalism field as a freelancer. In 1985 and 1986 I wrote approximately 500 articles in business, trade and professional magazines. I then switched over to books exclusively and have written over 70 books. These include my own as well as ghost-written projects.
Today I like to work on multiple books at the same time, normally two or three projects. Being able to switch back and forth keeps the writing process fresh and interesting. I generally write from 7 a.m. until noon and spend afternoons on research.

Customer Reviews

Most Helpful Customer Reviews

27 of 27 people found the following review helpful:

5.0 out of 5 stars Lot of repetition, March 6, 2006

By 

Dan2345 (Los Angeles) - See all my reviews

Amazon Verified Purchase

This review is from: Options Trading for the Conservative Investor: Increasing Profits Without Increasing Your Risk (Hardcover)

I would consider myself a value investor and don't buy stocks with large p/e, p/book or p/sales ratios. I never considered options, because I thought they were only for speculators, until I read an article in Barron's mentioning options in a conservative way. Then I came across this book, and I have to say, it is exactly what I was looking for. It explains in a great way how to use options when you're serious about "investing" and not a gambler/speculator.

The book doesn't of course tell you how get rich quick (otherwise it would not be a good book). But it tells you how to take advantage of market conditions without adding risk to your stock portfolio (with the exception of the risk of lost optortunity). The book uses actual excamples (using closing prices of October 2004) and walks you through most of the scenarios with real option/stock prices, which is a great feature.

The only negative I have with this book, is, as my review title states, that he keeps repeating himself to the point, that it really gets annoying. He probably mentions 20 times that, in a conservative way, you should only consider options of a stock that you consider good long term investments. That is a valid point, and one of the assumtions for the entire book. But it would have been enought repeating it maybe 3 - 5 times.

There are numerous examples of repetition and sometimes I wonder if he wrote the book in a rush without reading the preceeding chapters. There are a lot of sub-chapters, which are sometimes just pure repetition of other sub-chapters in another chapter.

There is one scenario which I wish he would have walked through with actual stock prices. The scenarios of rolling up/forward. Since from my (theoretical) understanding, it is very difficult on a net credit basis. But I'll try that out for real, and then I'm sure I will figure it out.

Anyway, I still give this book 5 stars, because the strategies described in this book are invaluable for any serious investor and I can't wait until my broker finally approves me for option trading and I can try these strategies in the real world. I wish I had had that knowledge a couple of years ago, when I was holding some stocks, which had a huge runup, but I didn't want to sell them, because I wanted to keep them for the long run. Now I would know what my "options" are of protecting paper profits.

37 of 40 people found the following review helpful:

5.0 out of 5 stars The Elusive Dream: Higher Returns without Added Risk, September 6, 2005

By 

Craig L. Howe "The Pointed Pundit" (Darien, CT United States) - See all my reviews
(VINE VOICE)    (REAL NAME)   

This review is from: Options Trading for the Conservative Investor: Increasing Profits Without Increasing Your Risk (Hardcover)

Most conservative and moderate investors will tell you they seek increased returns without adding additional levels of risk to their portfolios.

They are not adverse to risk; they just seek to control it. In short, they seek to

1. Preserve spending power after both inflation and taxes.
2. Seek to avoid unacceptable market, liquidity and diversification risks.
3. Protect profits without loss of invested positions.

If you fit this investment profile, then Michel C. Thomsett has written this book for you. In it he demonstrates how carefully selected options strategies can help you consistently improve your returns without adding additional portfolio risk. Options, he argues, do not have to be exotic, high risk or complicated. In fact, they can be employed as a powerful tool to reduce risk.

He wisely sets his ground rules early in the book. They are:
1. Limit options activity to stocks you have pre-qualified.
2. Have faith the market with rise over time.
3. Accept the value of fundamental analysis.
4. If trade down, be prepared to add to your position.
5. Believe there are an adequate number of stocks which will meet your investment standards.

Thomsett's book is well-written and illustrated - even if you are not familiar with options. In 255 pages he covers options strategies suitable for conservative investors. He includes covered call writing, contingent purchase strategies, rescue strategies to use when markets fall and combination strategies that produce cash to bolster current income.

If conservative and moderate investors remain true to their goals, options are a wonderful tool. However, Thomsett is experienced enough to acknowledge that deep in the heart of every market hedger is a speculator eager to spread his or her wings.

Stick with the author's ground rules and you will avoid the market's playground of temptations.

19 of 20 people found the following review helpful:

3.0 out of 5 stars Did Thomsett proofread this?, October 26, 2006

By 

Jonathan B. Lubar - See all my reviews
(REAL NAME)   

This review is from: Options Trading for the Conservative Investor: Increasing Profits Without Increasing Your Risk (Hardcover)

I think that this book could be helpful in following a conservative option strategy. However, there are a number of errors in the book that make for confusion. For example, on both pages 197 and 220, there is an instance in the middle of discussions involving straddles where "spread" has erroneously replaced "straddle". The chart on page 213 is useless due to printing being superimposed on printing. I would guess that the latter error is the printer's fault but the former errors are either the author's or editor's fault. For $34.95 I expect more care in the publishing of a book like this.