Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks

Product Author Bios

Dr. W. Edward Olmstead is the editor of The Options Professor, one of the world’s leading newsletters on options trading. He is also an options analyst for Spear Capital Management. He has consulted on short-term trading strategies with a member company of the Chicago Mercantile Exchange.

Dr. Olmstead is Professor of Applied Mathematics in the McCormick School of Engineering and Applied Sciences at Northwestern University. He has taught courses that cover both the theory for options pricing and practical strategies for trading options. Dr. Olmstead has received several awards including an endowed chair for teaching excellence and has been praised by his colleagues as “the quintessential teacher in our midst.”

Brief, carefully paced lessons on options and trading strategies using verbal definitions and many trading examples for clarification. Each lesson builds on the one preceding it and explains options in plain English, from start to finish. Step-by-step coverage of controlling risk, protecting your investments -- even advanced strategies other introductory books ignore! Authored by Dr. W. Edward Olmstead, contributing editor to The Spear Report and editor of The Options Professor newsletter.

Customer Reviews

196 of 199 people found the following review helpful Great book, practical pointers and easy read, December 14, 2009 By  okiedo "Bill Ryan" (Sparks, Nevada) - See all my reviews Amazon Verified Purchase(What's this?) This review is from: Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks (Hardcover) Ok, I haven't read "hundreds" of Options books and I am not a sophisticated trader, however I have been trading options for over 10 years, probably 15 years by now. I do it on a small scale like many of the people who will read this book. I have attended two expensive "Options Seminars" and a couple of freebies. I was very reluctant to read Professor Olmstead's book since he is a math professor and I have trouble with anything other than basic math. I was also put off by all the claims of how great a teacher he was, since often these claims in the preface of a book are the sure kiss of a mediocre read. I actually had to force myself to start this book since I ordered 4 different books on Options at the same time. Boy, was I surprised, pleasantly. He does get right to the point and moves on quickly to the next point in clear, succinct language that "even a Cave Man" can follow. I expected erudite and esoteric for a writing style and, instead, got "meat and potatoes" with gravy... Read more Help other customers find the most helpful reviews  Was this review helpful to you?  Permalink  Comments (3) 164 of 178 people found the following review helpful Interesting and clearly written book for those beginners itching to speculate in options, May 23, 2006 By  Craig Matteson (Saline, MI) - See all my reviews          This review is from: Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks (Hardcover) Trading in options by regular folks looking for big returns has been catching on and I am not sure why. Are they really trying to use options to alter the risk of their retirement portfolios - either lowering the risk to ensure the preservation of capital or to add volatility with the design of increasing returns? Probably not. The average person is probably acting as a speculator and placing bets. For the market, this kind of behavior is a good thing because it adds noise that allows the professionals greater opportunities to profit. Now, think about what that means. You know the old saying about sitting down and a poker table and if you can't spot the patsy that it's you? Remember, options are an area of the market where there are only winners and losers. These are instruments where one side wins and the other side loses. However, in the right hands they are very important and useful financial instruments. This book is not a textbook on option theory, pricing, or... Read more Help other customers find the most helpful reviews  Was this review helpful to you?  Permalink  Comments (9) 90 of 96 people found the following review helpful LISTEN BUY THIS BOOK!! It's the best book on Options Trading., February 28, 2008 By  D. Hamlett (Brooklyn, USA) - See all my reviews    This review is from: Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks (Hardcover) I have taken hours of classes on how to trade options. I have read lots of books on how options work and how to trade them. I have traveled hundreds of miles and spent thousands of dollars to learn how to become a better options trader. This book is sooooo... good if I had read this book first I would have made more money, loss less money, and I could have gained 100% more value from all the other options training I have done. If you are looking at trading options this is your starting point! If you already trade options then use this book as a review, becasue it has some very lucid explinations e.g.Chapter 29 - IV (implied volatiltiy) and the Black Scholes model. Now this will not be the only options book that you will get, and it does not go into super detail depth like a Sheldon Natenberg, but it is easy to read, it gets directly to the point and it's relatively small compared to other options books. The chapters are written independently of one another, so you can skip through the... Read more Help other customers find the most helpful reviews  Was this review helpful to you?  Permalink  Comment

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Praise For Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks

From Kirkus Reviews, Vol. 3, Issue 3 (March 31, 2006)
Trader, professor and editor of a successful options newsletter Olmstead consolidates his vast knowledge and experience into this accessible guide to options.

Appropriate for both beginners and more seasoned investors, this book covers everything from the basics of call and put options to advanced topics like delta-neutral trading and the Black-Scholes formula. Because buying options is cheaper and less risky than buying stocks, these time-limited investments are a great way to increase profits. Olmstead is a natural teacher, employing a concise, no-nonsense and easy-to-understand style. Readers will learn why “time is money,” how to use vertical spreads, how options can cut your tax bill and how to make profits even when you can't predict the market direction. Most importantly, Olmstead teaches how to “think like an option trader,” providing the market acumen necessary to maximize profit.

Sure to be appreciated by options traders of all levels.

Table of Contents

CONTENTS

Acknowledgments

About the Author

Preface

Section I:  BasicConcepts

• 1: Introduction
  
  • Why Options?
  • The Basic Concept of Options
    • Major Differences Between Stocks and Options
    • Leverage
    • Time Limitation
    • Price Movement
    • Financial Risk
  • A Detailed Explanation of Options
    • The Option Contract
    • The Call Option
    • The Put Option
  • Comments


• 2: Option Selection
  
  • What Is a Cheap Option?
  • Selecting a Call
  • Overall Evaluation
  • Selecting a Put


• 3: Entering and Exiting Option Trades 
  
  • Entering a Trade
  • Exiting a Trade


• 4: The Greeks
  
  • Delta
    • Computing the Delta of a Call Option
    • Application of the Delta
    • Computing the Delta of a Put Option
  • Theta
  • Gamma
  • Vega
  • Rho


• 5: Risk Graphs
  
  • Single Option Trade
  • Multiple Option Trade
    • Comments


• 6: LEAPS
  • Comments


• 7: Assignment Anxiety
  • Comments
  • Applications


• 8: Broker Selection
  • Types of Brokers
  • Commissions
  • Trading Platform
  • Margin and Trading Limitations
  • Live Broker Assistance
  • Comments


• 9: Miscellaneous Tips
  
  • Time Is Money
  • Trading with the Trend
  • Risk Capital for Options Trading
  • Tracking Trades
  • Anticipating Events
  • Real-Time Quotes
  • Market Orders with Options
  • Options Calculator

Section II:  TradingStrategies

• 10: Vertical Spreads
  • Debit Vertical Spreads
  • Bull Call Spread
  • Bear Put Spread
  • Comments
  • Credit Vertical Spreads
  • Bull Put Spread
  • Bear Call Spread
  • Comments


• 11*: Event-Producing Credit Spreads
  
  • Comments


• 12: Calendar Spreads
  
  • The Rollout Maneuver
  • Comments


• 13*: Advanced Calendar Spreads
  
  • Volatility Skew Trades
    • Comments
  • Ratio Calendar Spread Trades
    • Comments
  • Deep-in-the-Money LEAPS Put Calendar Spreads
  • Diagonal Calendar Spread Trades


• 14: Covered Calls
  
  • An Idealized Trade
  • A Realistic Trade
  • Covered Call vs. Naked Put
  • Comments


• 15: Straddles and Strangles
  
  • The Straddle Trade
    • Comments
  • The Strangle Trade


• 16: Stock Repair and Stock Enhancement
  
  • Stock Repair Strategy
  • Comment
  • Stock Enhancement Strategy


• 17: Married Puts
  
  • Comments


• 18: Collars
  
  • Comments


• 19*: Advanced Collars
  
  • Comments


• 20: Naked Option Writing
  
  • The Risk of Naked Option Writing
  • Acquiring Stock with Naked Puts


• 21: Stock Substitutes
  
  • Synthetic Long Stock
  • Comments
  • Deep-in-the-Money Put
  • Deep-in-the-Money Call


• 22: Backspreads
  
  • Comments


• 23: Butterfly Spreads
  
  • Standard Butterfly Trade
    • Comments
  • Butterfly Trade with Adjustments
    • Comment
  • Unbalanced Butterfly Trade


• 24: Iron Condors and Double Diagonals
  
  • The Iron Condor Trade
  • The Double Diagonal Trade
  • Comments


• 25: An End-of-Year Tax Strategy
  
  • Tax Code Restrictions
  • Qualified Covered Calls
    • Basic Strategy
    • Follow-Up Variations
    • Comments

Section III  SpecialTopics

• 26*: Day Trading an Index with Options
  
  • Comments


• 27*: Delta-Neutral Trading


• 28*: Theory of Maximum Pain


• 29*: Implied Volatility and the Black-Scholes Formula
  
  • Historical Background
    • Derivation of the Black-Scholes Formula
    • Application of the Black-Scholes Formula
  • Implied Volatility
  • Applications of Implied Volatility
  • Comments


• 30*: THE PUT-CALL PARITY RELATIONSHIP
  
  • Calls Cost More Than Puts
  • Applications of Put-Call Parity

?*Chapters with more advanced content are marked with an asterisk and can be passed over by beginners during the first reading of this book.

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Preface

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