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The Four Biggest Mistakes in Option Trading (Trade Secrets Ser) [ILLUSTRATED] (Paperback)

by Jay Kaeppel (Author)

3.8 out of 5 stars See all reviews (13 customer reviews)

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Editorial Reviews

Product Description
You are viewing the first edition. This title is now available in an updated 2nd Edition Kaeppel beams a very bright light on 4 of the most common yet most difficult to overcome trading `dont's'. In easy-to-understand terms he breaks down the problems and offers solutions. Keep this concise little gem near you at all times while trading. You can earn big profits in options trading by avoiding the 4 most common and most costly mistakes the majority of traders make. System and software developer Jay Kaeppel shows you how to avoid common pitfalls option traders encounter that cause them to lose money in the long run.

In Kaeppel's quick reading style you'll . . .

> Learn to isolate the 4 most common mistakes

> See why they are so common and easy to make

> And discover a simple strategy to avoid these mistakes altogether

Concise and to-the-point here's an action plan you can read and put into place immediately to become a more profitable trader in no time.

Product Details

Paperback: 70 pages
Publisher: Traders' Library; illustrated edition edition (March 1, 1998)
Language: English
ISBN-10: 188327222X
ISBN-13: 978-1883272227
Product Dimensions: 8.3 x 5.3 x 0.5 inches
Shipping Weight: 4 ounces

Average Customer Review: 3.8 out of 5 stars See all reviews (13 customer reviews)

Amazon.com Sales Rank: #550,478 in Books (See Bestsellers in Books)

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Front Cover | Table of Contents | First Pages | Back Cover

Citations (learn more)

2 books cite this book:

Advanced Option Pricing Models by Jeffrey Owen Katz in Back Matter
The Investor's Toolbox by Peter Temple in Back Matter

What Do Customers Ultimately Buy After Viewing This Item?

	65% buy the item featured on this page: The Four Biggest Mistakes in Option Trading (Trade Secrets Ser) 3.8 out of 5 stars (13)
	17% buy The Four Biggest Mistakes in Option Trading, 2nd Edition (Trade Secrets) 4.2 out of 5 stars (5) $17.95
	17% buy The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets 4.4 out of 5 stars (27) $26.39

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Customer Reviews

13 Reviews

5 star:		(7)
4 star:		(2)
3 star:		(1)
2 star:		(0)
1 star:		(3)

Average Customer Review

3.8 out of 5 stars (13 customer reviews)

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Most Helpful Customer Reviews

114 of 114 people found the following review helpful:

5.0 out of 5 stars Excellent book that delivers exactly what its title says, June 19, 2003

By	Gaetan Lion - See all my reviews (TOP 500 REVIEWER) (REAL NAME)

There are four basic mistakes all beginning option traders make, these are:
1) Relying solely on market timing;
2) Buying only out-of-the-money options;
3) Using strategies that are too complex; and
4) Casting too wide a net on option choices

Relying solely on market timing.
It causes failure because it ignores implied volatility. It can lead to paying far too much to purchase an option. It would be like buying a stock without knowing its P/E, or buying a car without knowing its blue book value. The way to avoid this mistake is by carefully analyzing which options are best suited to achieve your objective. Also, measure what is the current implied volatility of these options and compare it vs. the historical volatility of this option. This will give you an idea of the current valuation of this option, and whether it appears overpriced or underpriced.

Buying only out-of-the-money options.
By doing so, you ignore the probability that the option will eventually be in-the-money. It leads to buying options with little likelihood of profiting. You can get lucky once. But, such a blind strategy is a sure way to get wiped out in option trading. Instead, you should know exactly what is the probability of you making money on each option trades. This entails knowing the "Delta" of a specific option. If an option has a Delta of 20. It has a 20% chance of being in-the-money.

Using strategies that are too complex.
This leads to unfavorable risk\reward situations. First, you should determine your objective and make certain the trade you are going to make can achieve those objectives without more risk than you can handle.

Casting too wide a net.
You will spend too much time wasted looking for opportunities among illiquid options. By doing so, you will waste a lot of your potential returns on the wider bid and ask spreads of these less than liquid options. Instead, focus on securities that have actively traded options.

This book is a real eye opener on option trading.

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74 of 77 people found the following review helpful:

3.0 out of 5 stars Its an okay book!, April 2, 2000

By	skittles (Illinois) - See all my reviews

This book is easy to read. It is direct to the point but the 4 mistakes he mentioned are limited to only the basic option strategies. If you are a beginner to the options then you might want to check this out. But if you're already a professional options trader, try other books, because chances are you already know these 4 mistakes.

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28 of 29 people found the following review helpful:

4.0 out of 5 stars Good but brief, November 6, 2002

By	David Gottner (Bellevue, WA United States) - See all my reviews

This is a good book, though a bit pricey for a book that can be read in less than 1 hour.

In it the author describes the biggest mistakes option traders make which are: ignoring implied volatility, making long-shot bets with options, using strategies that are too complex (for you), and trading illiquid options.

Material is good, with a chart of which strategies work the best for varios levels of implied volatility and other gems, but it's debatable if this book is worth its hefty price tag.

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Most Recent Customer Reviews

1.0 out of 5 stars beware, buyer
This is the first review I ever share on Amazon. I tend to keep my thoughts to myself, but this book is more a pamphlet that leads to their service advertisements. Read more

Published on December 7, 2005 by Daveron

5.0 out of 5 stars The Four Biggest Mistakes in Option Trading
Well written and concise. Very very importan for ALL Option traders to own and keep in their library. Read more

Published on August 20, 2005 by George Sanchez

1.0 out of 5 stars what a Joke
by far a worthless book on options,
the cover looks great, but this has no
value; I learned more on the optionsxpress
website than this book, anyone who has... Read more

Published on August 25, 2004 by M. Way

5.0 out of 5 stars Short and sweet but too theoretical
This book is useful in directing novice options traders to the four biggest mistakes usually made in this area. Read more

Published on October 27, 2003 by Daniel Smart

5.0 out of 5 stars To succeed you must know your enemy
This is a very good book for what it does. It introduces novices to the common mistakes option investors make. Read more

Published on June 16, 2003 by Super Trader

1.0 out of 5 stars Save Your Time and Money--This Book is Worthless...
This is a brief and shallow book. It assumes that the reader, who is an options trader, has limited intelligence and will do stupid things. Read more

Published on January 3, 2003

5.0 out of 5 stars Excellent book but could be enhanced
This book is excellent for beginning options traders. You can save yourself a lot of losses and headaches by following the authors advice. Read more

Published on August 18, 2002

5.0 out of 5 stars Essential Reading For Beginning Option Traders
I strongly recommend you read this book before you even think about buying or selling stock options. Read more

Published on September 4, 2001 by msdemail

4.0 out of 5 stars Small but Powerful
Options are so easy to use incorrectly that anyone who starts trading without understanding all risks is sure to lose money very quickly. Read more

Published on April 22, 2001

5.0 out of 5 stars A worthwhile read for any option trader
I have just finished reading Jay Kaeppel's 1998 publication "The Four Biggest Mistakes in Option Trading". Read more

Published on October 17, 2000

› See all 13 customer reviews...

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