Customer Reviews

Show Me the Money: Covered Calls & Naked Puts for a Monthly Cash Income

5 star:		(28)
4 star:		(8)
3 star:		(1)
2 star:		(2)
1 star:		(4)

 

 

Do you like corny stories of a master teaching a student? Do you like a book with little real content other than to support the author's software? Then this book is for you.

Groenke's book outlines the heart of his system, Buy Rank. Take a close look at the calculation and the simple version you can figure out in 2 seconds looking at a stock chart.

There are two parts: Buy Limit that feeds into the Buy Rank calculation. Look closely, really it is a laughable joke. A calculation made to justify software, a book, and make people think they have a magic formula.

Buy Limit = Low + .25 * (52 Week High / 52 Week Low)

Buy Rank = (10 * (Buy Limit - Close)) / (.25 * (52 Week High / 53 Week Low))

Buy Rank: Produces a number between +10 and -30. A +10 tells you the stock is at a 52 low. -30 tells you the stock is at a 52 week high. WOW-WEE! How about peaking at a 1 year stock chart for 2 seconds. The book recommends you buy a stock when Buy Rank moves down from 10, to 5, and the stock is over the 50 moving average.

Simple Version: Buy a stock when it is at a 52 week low, is now turning up, and crossed over the 50 day moving average. THAT IS IT, Buy Rank in 1 sentence. The Buy-Rank number is nothing more than a gimmick to sell a book and make investors think that it is some "magic formula" when it is NOTHING MORE than the old "buy low sell high." A 2 second peak at a stock chart will tell you a stock is at a 52 week low. Want to scan for stocks at 52 week lows, go to MSN or Yahoo, and put P/E > 0 and < 20 so you are looking at value.

Conclusion: You can buy any number of books that discuss naked puts and covered calls. This book has very,very little content, chapters of a lame story, basically it is a user guide (and a week one at that) for the software. As for the software, get your free trial and keep in mind what buy rank really is. You may then realize you do not need it. You should get the book for free if you bought the software.

One so-so tip from the book was "okay" you want to own 1000 shares of a stock, buy 500 shares, sell an ITM call, sell 5 OTM puts. There ya go, the best part of the book is now yours.

Ronald Groenke rightfully stresses the importance of cash flow but he understates the risks involved. This is a book written for option beginners and, as such, a little more emphasis on the risk involved would be appropriate. The book is mostly about covered calls and while there is not much additional risk in selling covered calls there is an important trade-off that should be considered. When you sell covered calls you give up the possibility of a Peter Lynch style multi-bagger replacing it with an income stream.

There is not much discussion about selling naked puts but if they are suggested it should be made clear that they are a lot more risky than covered calls. The first caveat is that unless you are called Warren Buffett you have secure the puts. The puts are "naked" in that they are not covered by stock short sales but they are secured with cash or margin. On page 54 Groenke says: "And you get paid up front when you sell a Call or a Put. That money is yours no matter what." This not true for puts, the premium you get plus another amount is retained by the broker as a guarantee against being assigned. If assigned, that money goes to pay the shares you are buying.

Groenke also overstates the income you get from the puts. In effect he ignores the amount of money you put at risk when selling the naked put which is the strike price less the premium you receive. From page 43: Jake asks "With Career Education you sold numerous Puts and they expired. How would you computer your return on that?" to which Graham replies: "Perhaps with the potential investment of an assigned put." That is the correct answer but that is not how he computes the rates of return on the puts. On page 45 there is the case for Plexus which shows a gain of 9.96% based on $17.604.50 invested in 800 shares at $22.00. But the total amount of money put at risk is $17.604.50 for the shares and $19,462.02 for the puts, $20,000 strike less $537.98 premium received. Using $37,066.52 as your base, the return is only 4.84%. My calculation assumes that the stock goes to zero and while that is not likely, had you invested in Lehman Bros. or Enron, well...

I bought the book because I too like selling covered calls and cash (margin) secured naked puts. Frankly the story of Jake and his professor is a bit corny but don't let that put you off, it helps pace the real stuff. One reviewer complained that the book is really an infomercial, which it is. One of the big difficulties in investing is finding stocks to invest in, one should have an inventory of potential candidates. If the software Groenke has for sale, which I have not tested, lives up to what he claims for it, then it makes a lot of sense for him to offer that software and explain what it does. A lot of books are long on theory and short on practice. Show Me the Money is short on theory but, with the help of the software, long on practicality.

As a closing comment, if you are going to sell naked puts, make sure not to overextend your margin, the money you got for the puts has not been earned until either the puts are bought back or they expire worthless.

The first few pages are an advertisement for his website/software and I knew right away it was going to be "another one of those books." I love reading stock books though, so I chose not to judge a book by its cover or by the first few pages. It didn't get better... It was basically an infomercial, literally; it even had fake characters telling their story. The story is about a couple and their rich friends and in the beginning of the book the character even thinks to himself, "Hmm... I wonder which one of my rich friends that new bentley belongs too" (not literally word-for-word but that is the basic idea. From the title "Show Me the Money" I was expecting an advertisement, but like I said, I dont judge books by their cover. I feel like my intelligence has been insulted. Let me get one thing clear: selling monthly options IS a good strategy and that is why I bought this book - I wanted to learn more about the strategy, but this book quickly ended up in my garbage can. If you want to learn about selling options then I encourage you to keep researching, however, save yourself the time and try other books first.

If you're already familiar with covered calls, this book is elementary. It really could have been condensed into about 25 pages, just including the stock search criteria and the explanation of the key indicators. I tried out the trial of the free software also. It was all right, but nothing your brokerage couldn't give you. I paper traded a couple of the recommendations and they did all right, but the problem was the option premiums on the selected stocks were too low to make any money.

I usually don't write reviews because I read a lot of books and it is just too time consuming writing a good review on each one. But this book was so useless that I am compelled to write something. First, the title is catchy, making $ off long equities which are just sitting idle. Second, the material between the covers can be distilled into at most one chapter if not even one paragraph. This padding results from the conversational style type of format which the author used to write the book. To me, it seems like he uses this approach because he really doesn't understand what he is talking about or doing despite his results. This book is just too thin in content, understanding and thought.

My husband and I are currently taking a classroom course on trading options. Believe it or not, there is a safe way, with minimal risk, to trade options and make monthly income! Most people only know how to lose money on options, not how to make money. This book was recommended to us by one of our class mates and it certainly reinforces safe, money producing option trading. Selling naked puts and covered calls is the main thrust of the book and delivers the information in a simplistic, easy to understand way. It does tout some software that I personally won't be using but that's okay. The book is written so anyone can understand the "how to's" of option trading. I definitely recommend this book for beginners that want to understand an income-producing method of trading options in the stock market.

I learned a lot about Covered Calls and Puts from the book. And the manner in which the information was presented made it very easy to pick up on the concepts. The information was presented in the form of a story in which the expert was introducing the novice to the concepts. And this vehicle made it easy to offer opportunities for review and elaboration of the concepts.

But throughout the book, I was aware of the underlying sales message. The author wants you to buy his software program. The examples in the book were chosen to show the strengths of the tool. But I am skeptical that all is so rosy in real life. And the few examples of failures of the investment plan used extraordinary events (e.g,. the crash of a large commercial airplane) that could not be anticipated by anyone. In my opinion, this was disingenuous. Because it would lead one to believe that the software tool works well in most situations and fails only when an extraordinary event occurs.

Net-net. If you know little or nothing of Options, you will learn a lot from the book. But I would be cautious about buying the software tool.

Excellent little read for people wanting to know more about using or
writing cover calls and using naked puts for monthly income. I received
my order very fast and was not over charged for shipping would buy
from seller againt from a scale of one to ten I rate a solid 10 thank you.

The Buy and Hold strategy is dead...at least for awhile....Learn a new strategy from a conservative investor. If you still deal with your brokers you can afford this book even if trash it....You do not need brokers....You need a plan..Groenke can give you a good start and he can offer you further support if you choose....

This book will give you basics for covered calls and puts.....This is the only strategy that is not totally based on "wishing and hoping"...Creating income on quality stocks will enhance your returns on a monthly basis......This book will change your investment thinking....

For those who are familiar with this author's work ("I've got both Covered Calls Naked Puts" as well as "Cash for Life")the basic story line will be familiar. Don't let that put you off though. I've found that repetition can be the cornerstone to good learning. In each of his books, Groenke tells the story with a bit of new information. He could have released his books as different editions of the same book and accomplished the same purpose, but, despite that, the new information is worth the $16 the book will cost you. This edition is updated to take into account the difficult market conditions we have seen in the last year or so. It is worth the read. I use his software as well, and although, as one reviewer noted, this book is a bit of a commercial for his software package, the software does make finding likely candidates for your option portfolio much easier. For the price, I don't think you'll find a more useful book for explaining how this type of trading works. Year in and year out, it is the best performing segment of my portfolio.