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Get Rich with Options: Four Winning Strategies Straight from the Exchange Floor Hardcover – October 5, 2009
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"Enlightenment Now: The Case for Reason, Science, Humanism, and Progress"
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From the Inside Flap
The best way to learn about options is by listening to someone who knows how the business works. After numerous years as an options market-maker in the trenches of the New York Mercantile Exchange (NYMEX), few analysts are more familiar with how to make money trading options than author Lee Lowell. Now, in the Second Edition of Get Rich with Options, Lowell returns to show you exactly what works and what doesn't.
In order to survive and thrive in today's financial markets, you must seriously consider the use of options in your investment endeavors. Options allow you to reap the same benefits as an outright stock or commodity trade, but with less risk and less money on the line. The truth is, you can achieve everything with options that you would with stocks or commodities—at less cost—while gaining a much higher percentage return on your invested dollars.
Updated to reflect today's dynamic times, this reliable resource provides you with the knowledge and strategies needed to achieve optimal results within the options arena. It quickly covers the basics—from how options are priced to using volatility to your advantage—before moving on to the four options trading strategies that have helped Lowell capture profits time and again: buying deep-in-the-money call options, selling naked put options, selling option credit spreads, and selling covered calls.
While none of the strategies highlighted here have changed since the first edition—because they're still as sound and successful as they've ever been—more examples of Lowell's favorite strategies are included in this Second Edition. In addition to outlining his proven options trading strategies, Lowell also shows you how to set up your own home business with the best options trading software, tools, and Web sites.
Options can be an essential part of your portfolio, when used properly. The Second Edition of Get Rich with Options shows you exactly what it takes to make it in this field and will put you in a better position to profit from the power of options. With this book as your guide, you'll quickly discover how—through safer speculation and hedging techniques—selling options can generate immediate income.
From the Back Cover
Praise for the first edition of Get Rich with Options
"No more excuses! Get Rich with Options provides a clear, honest, and detailed picture of the potential to trade stock and commodity options successfully. Lee covers all the bases, starting with the basics then spending time on concepts such as ITM, OTM, ATM, volatility, spreads, and delta. He turns the mystery of options trading into something cohesive and does it in an entirely user-friendly way. Get Rich with Options is the perfect segue into the world of options trading for anyone who has been intrigued by this investment strategy but too intimidated to try it. For the more seasoned trader, Lee offers little-known tips and advice that have kept him ahead of the pack for years. This is a rare how-to guide that answers all the questions, gives step-by-step instructions, and should be on every options trader's bookshelf."—Margaret Beeler, Managing Director, International Strategy & Investment, Inc.
"There are many options books in the market today. For the most part, they impart sterile options strategies that will 'theoretically' work for you. But, they are written from the perspective of an academic. In Lee Lowell's Get Rich with Options, you will learn options and commodities basics. That's not where the value is. The value of this outstanding, understandable book comes from the author's perspective of how to trade options and commodities. Lee Lowell brings you the secrets from the trading pits in New York, the secrets of a market-maker, a trader who must make money to survive, and a trader who has made thousands of successful trades. After reading the book, you will come away with a professional education and the stark realization that trading options is easier than you think, more profitable than you could imagine, and that there are only three or four surefire strategies that will make you a lot of money consistently. Clear your shelf for this one, it is an invaluable guide for the fastest growing segment of the investment arena today."—Karim Rahemtulla, Investment Director, Mt. Vernon Research
"Option strategies are often delivered in a sea of hype. It's refreshing to learn from someone like Lee who takes a conservative, no-BS approach to options and still makes investors money. I'm impressed by his frankness, his sincerity, and the way he manages risk."—Julia Guth, Executive Publisher, The Oxford Club/Investment U
"Lee Lowell leads us down the road of complex derivative products and takes us out the other side much more profitably. This book will show you that trading on options is not out of reach. Lee takes complex ideas and breaks them down step by step to help every trader from novice to expert master the art of options trading. I found new ideas and skills at every turn in this book and think it's a must-read for the serious commodity options trader."—Kevin Kerr, Editor, Global Commodities Alert, and author ofA Maniac Commodity Trader's Guide to Making a Fortune
Top customer reviews
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I have an MBA Finance degree 20 years ago but never put it in practical use. After reading this book but without much urge to make big bucks initially. Adding two other useful books plus my financial sense I immediately started trading options 2 years ago, strictly on Selling side, strictly Credit Spreads, again, no paper trading that takes emotional aspect away so the paper results are faulty. After paying for some costly mistakes at the beginning (April to October 2011) so far I'm doing very good with 250%/400% annual returns. I know for this past 24 months I had good timing with surging SP500 and the bears hasn't come back yet but I'm very well prepared for that(I trade and study every weekday). Here's my opinions about the book: I generally agree with other reviews that rate this book 3 or 4 stars and found these readers are the ones who not only have solid knowledge and experiences but objectively evaluate this book and try hard to give potential reader/buyers reasonable advice.
Credits to this book: 1) on selling side, with controlled risk; 2) simple, easy strategies to be implemented,you don't have to understand WSJ to get ideas from the book; 3)more details on credit spread strategies that made author most of his fortune; 4) Real experience from a former floor trader, the neutral-biased mmkr story helps me understand unique behavior of some ETFs or big cap stocks on expiration date.
My trades primarily are for weekly options on ETFs, so I can have a worry-free weekend with my family and pay little attention to company's earning surprises or weather in FL (OJ,yes you're right). I do this on full time basis. I realize that in order to get "rich" you need to at least be able to draw income consistently every month, if not every week, to support your family as first step, do it part time is not possible.
As critic of this book, like other reviews, the book definitely is an incomplete material, the very important part of serious trading - "position sizing" never mentioned. If you're like me 2 years ago without working knowledge on options, and commodity futures this book could lead you into disaster because of the urge caused by author's mentioning "Get Rich..." oh boy, his examples shows only ONE commodity contract in most trades that makes me wondering if these trades were designed to prepare the writing of the book (it will make no sense if these trades lose more money than the royalty received). Why professional traders like Mr. Lowell will ever enter this type of "experimental" trade? If you cannot provide your family with sufficient income consistently, then forget about "get rich with...". In my area on Long Island you can barely call yourself "rich" if you have at least $1 million in liquid assets and a quarter million $ annual income, consistently. So if you have a decent account, say $100k, to start, you have to figure out how to reach the figures i mentioned within 10 years, So average 30% portfolio return per year should be your minimum target to "get rich" if your spouse can support your plan and guarantee "no draw" from your trading account for 10 years. I have no idea how Mr. Lowell can consistently grow his portfolio at 30+% every year under bull, or bear market if the actual trades in the book be performed? So the fact that Mr. Lowell not only survived the 2008/09 market meltdsown but also seems doing very well makes me having another speculation that he has more useful stuffs/skills to be revealed, maybe you need to go into his paid service site to explore or hone yours.
And this is the reason I give the book 3-star: without this book (concepts from real trader) I couldn't have made $ millions within 2 short years including 6 turbulent down months (I started with $120k), but if being with this book ONLY I'd probably have been dead or still struggling. For those newbies who don't have short-term investment/speculation background or finance education(sense) sometimes it won't go wrong if you study one classic Options textbook, 2nd book on technical analysis and the third focusing on risk management, yes, buy this book as your reference after you're well equipped. After all, only "Credit Spread" can potentially assure, in my case, a big fat check coming every Friday at 4:00pm. Friday becomes my "pay day" and best of all, no worry during the weekend, because all positions expires worthless, even better, if your short legs are far reach OTM, you don't need to close it (not recommended, my warning), under normal situation, if you're not too greedy, there's no exit strategies involved, just let all positions (long or short) expired, how good is that? Under prolonged bear market, your doing is no difference from one under Bull market, you only need to be patient and extra-careful when market is uncertain, it only takes one big "gap down" or "gap up" to make you belly up! You don't have to trade every week but still have a fabulous year!
updates: Oct.22, 2013
After the bitterly fight regarding partial government shutdown/Debt debate in DC, I'm finally having time to relax a bit. Any time you have these types of events that moves market violently, you're presented tons of opportunities to cash in these super rich premium! Now I like to give this book an upgraded 4-star. Reasons: As my accounts (total 14 accounts) continues to be exploding, I tried other more advanced strategies to meet different market conditions every week, and to maintain my decent annual return, I've invested $500 on books and seminars, and seemed to have more confidence that I feft like I was one of Goldman Sachs traders. You know what? that mindset made me crazy, I need three stacks of nine 30-in Dell UltraSharp monitors to monitor all legs (whew, iron condor, iron butterfly, straddle, & on & on.....) though I never lost any money at all, but my monthly earnings went down! and my head turned to be crazy nut! In August, I stopped all these advanced strategies, back to the simplest, but well-worked "Vertical Credit Spread", then my performance comes back to 200% annual return level, and I need only 4 monitors to see everything. So my advice to all perspective players: read all reviews here, positive, or negative, doesn't matter, you need to grasp the FACTS, negative comments w/o facts is garbage, positive comments w/o details is cream puff you don't need. Keep everything as simplest as possible, mastering more advanced options trading skills sometimes only make you feel "more professional", but at the end the performance result is the only thing to judge your success, even you only know one strategy and consistently make money, no one will look you down. Also if you decide to trade full time like those 60-something retired IBM engineers/MIT professors, you need to fully understand Options Greeks which are not focused in Lowell book, the Greeks enhance my performance and confidence so much during difficult times that I have to mention it.
More updates 03/09/2014
we had a wonderful year of 2013 and got some headwind in January 2014 as emerging mkt crises. However we still stick to vertical credit spread strategy even we might trade calls and puts in the same week, but it's not "condor" thing at all. As my account values are skyrocketed, I successfully negotiated a deal to partially manage one of the Chinese private funds. I didn't impress them by my sophisticated strategies or knowledge or elite B-school background, just by a simple certified trading records for the past 3 years.
updates on 01/21/2015
we have another spectacular year all accounts have an average 88% to 110% return, this past year S&P500 has only 11% return vs. 2013's 30+%, so the choppy chart and several below 200 DMA line closings had yielded 4 losing weeks for me, plus 4 weeks worldwide travel, I actually had all annual gains from just 36 weeks profits. The expand trading volume and bigger market in 2014 inevitably forced me to register with SEC as Large Trader. Money aside I learned a lot more this year than past 3 years combined. And what makes me happy is the confidence I've built since 2011 after reading Lowell's book, and I now can say I'm in charge of my family's future. Indeed I'm in a situation I can't even imagined years ago and well into the country's top 1%er, and I hate to tell you I switched from democrat to Republican. My wife was so scared when I decided to do this full time and quit job all together now she's fine even seeing I lost $240k in one week last year. What a difference it is! Before April 2011 the most expensive car I'd ever owned was Ford Explorer XLT followed by Toyota Camry LE, now I can skip all the nice luxury category into an Aston Martin V12 Vanquish for myself and a BMW X5 50i M for my wife! Thank you Mr. Lowell, my trading strategy remains the same, and the only one: Credit spread (bullish or bearish).
In a separate note I like to comment on the controversial title "get rich with...", Of all 4 strategies Mr. Lowell introduced, why do I stick on "credit spread" only?? If "getting rich" will ever be possible you need to do what I did. As some reviews state that average Joe, even successfully implements Lowell's strategies, can walk away with only a few hundred bucks though still better than losing or none, but that won't get you into the country's top 10%! (based on IRS survey not all 10%ers are wealthy). Selling one put contract for $10 premium and get assigned to add 100 shares of stock position at desired lower price? WoW. Looking for buying one DITM call and hope the market to go your direction and make nice $100 after a bigger bid/ask slippage? WoW. Traders: any time you need the market to go only one direction to profit you can't put a significant fund out of your account to bet, right? even you make 300% on a tiny position so what? you might still make only 0.3% portfolio gains! But credit spread is different: it's the ideal strategy to consistently generate monthly, weekly or even daily income! you can profit even market goes against you, well I'm not trying to fool you here as experienced traders know exactly what I'm talking about: as long as you have a solid idea about the underlying price range during a set time frame.
As Mr. Lowell points out: guessing a range is much easier than guessing a price point! That's how you for most of the time can dump 50% to 75%, in some extreme cases, even 100% of all your money into it and win it big! I started trading in April, 2011 with $120k house equity money, after almost 5 years of 88% to 250% annual returns, you can figure out using a scientific calculator how much I've accumulated now! At casino, you may win big a couple of times, but I've never heard of any gambler generating 100+% annual gains year by year w/o cheating. In security trading world, I'd say credit spread strategy makes it possible. So remember what Mr. Lowell stresses in his book this strategy(credit spread) is HIS FAVORITE and the one that makes most of his fortune, digest this then you probably won't be so upset by the title.
This book explains the importance of not thinking of only buying calls and puts, but also the danger of wasting your money on deep out of the money options that have no intrinsic value and do not even move in your favor even when you are right about the stock. He also explains briefly how delta works with option price movement as it correlates to the stock, a .50 delta means the stock moves half a much as the stock, a 1.00 delta means the options move completely with the underlying stock. The Theta is also covered which is a measurement of how fast the option value deteriorates in relation to time. I found two of the web sites the author suggested to be great for option information. One has an option calculator where you simply key in the option information and it gives you the options value along with the Greeks. Another shows you the probability of an option reaching your target price before it expires.
The book basically gives you four strategies that tilt the odds in your favor for winning with options while at the same time controlling risk.
#1 Deep-In-The-The-Money call strategy: If you want to use options to participate in the up trend of a stock then buy deep in the money calls that move equally with the underlying stock so you can profit along with the stock holders. You want a delta of at least .90. These options only cost about 50% of what the stock costs and you get 90% of the movement, that is a great deal! Stay away from deep out of the money calls they are like lottery tickets with little chance of being worth anything at expiration. This advice alone is worth the price of the book.
#2. Sell Puts: Instead of putting in limit-buy orders for stock you want to buy sell Naked Puts on hot stocks you want to buy when they pull back. Support or 50 day moving averages are a food target price to use to sell your Puts. Only do this on up trending stocks that you want to own.
#3 Option Credit Spread: This strategy has a limited risk and limited return feature. It takes advantage of the time decay factor. It entails the buying and selling of the same amount of options as a single transaction for a single price at the same time. They are done at different strike prices and are either both call or both put options. You will be selling the more expensive of the two options, which will yield cash credit to your account. Then you will buy the less expensive one. Your profit is the difference you made on the one you sold versus the less expensive one you bought.
#4 Covered Call: Put stocks that you plan on holding long term to work by selling covered calls on them. Sell your calls out of the money and at prices you would be happy to sell the stock for. Sell the calls above price resistance to avoid it being called. This creates a nice income stream.
"Don't be under the impression that picking a market direction and being right on it is the only way to profit." Options gives us many, many ways to make money. With only 12% of options being assigned and used, if you sell instead of buy you should average 88% wins. I highly recommend this book for option traders ready to go the the next level beyond simply being buyers of options and puts to sellers of options and profiting from theta. Be the casino not the gambler.
The strategies set forth in this book are simple, reasonably low risk (as far as that can be said for options strategies) and effective. These strategies can also be very profitable. I have used them all with success at one time or another.
While the book could be improved in a few spots (I particularly do not like the title), the ultimate question is whether this book can make you money. I believe the answer to that is an unqualified "yes." My review score is based largely on that fact. Don't expect that you are going to get rich *quickly* with options without taking on astronomical risks, despite the title of the book.
Most recent customer reviews
It is more of a buy and hold approach, IMO. No way.Read more