So whats happening? The market has been a little weak since the year started, oil has now reached $49 per barrel, the federal reserve may eliminate their bond-buying stimulus program at some point this year (my guess is probably year-end), AAPL shares have 'tumbled' a bit (random insert), and the list goes on. Regardless of it all, my passion for investing education and my mission remains intact and stronger than ever.
I've been reading a whole lot lately. Hence, felt it would be a good idea to share book reviews from time to time whenever I read something finance related.
I am here today to share my opinion on a book I read recently:
This book was sent to me by my online broker, TDAmeritrade after I participated in one of their online training sessions on options. Something you probably already know about me is that I am constantly looking to educate myself and expand my knowledge on the subjects that are of interest to me. Hence, I am always in the look out for interesting seminars or training sessions I can participate in.
The training was targeted specifically towards woman and options trading. I have been investing since 2008 but my sole focus has been on individual stocks. I love the idea of being "part owner" of a company and this is the type of investing I've always felt comfortable and confident with. The concept of 'options investing' is something that I was truly terrified of for years. Whenever I heard the word options in the media or in my finance classes my mind would automatically race towards reckless investing techniques where one could loose significant money quickly if not careful. I am sure that's the case for any kind of investing if one is not very knowledgeable. However, for some reason I always saw options as extra 'dangerous'....until I read this book.
By the time I finished the book, I realized the author definitely did a great job of proving the following statement:
"...the bottom line is that if you are already taking the risk of investing in the stock market, the two options strategies I teach in this book, if applied properly, will actually reduce your risk when investing in the stock market". -Laurie Itkin
I believe the title of this book should be changed completed to involve pretty much everyone interested in options (not just woman). It is a very easy, straight-forward read with practical advise. It gives a general explanation of the four basic kinds of option investing out there:
1.Buy a Call
2. Buy a Put
3. Sell a Call
4. Sell a Put
- Writing Covered Calls: "Renting out" your stocks
- Selling Puts: Getting Paid to Wait and buy stock "on sale"
In a nutshell, the above noted techniques allow an investor to receive income for either agreeing to sell shares of a stock you already have at a particular price OR receiving income for agreeing to purchase a stock you want at a particular specified price. The income can be received on a weekly, monthly basis, or longer length of time depending on the chosen contract. The above techniques basically can be seen as an 'insurance premium' other investors pay YOU in the event they either have to sell or buy shares of a particular company at a specified price. Its a guarantee that they'll be able to carry out the transaction regardless of what happens (within a specified time frame) because of the contract in place.
This may sound a bit confusing coming from me since I didn't write the book but I can tell you the book does an excellent job of explaining this in simple terms and with great examples. Obviously this is a very summarized version and there are risk to keep in mind (as there are ALWAYS risks with investing). The author clearly explains the risks but also goes in to great details explaining the techniques step by step and even shows screen shots of an actual brokerage account and how you can purchase the options contracts. Books that offer practical, hands-on advise instead of "theoretical" and generalized ideas, are the best.
My plan of action: Obviously I have a long way to go when it comes to options investing but this book made me excited to take it a step further and learn even more. TDAmeritrade has a section called "paperMoney" where investors get $200,000 of "fake money" to invest in pretty much anything. I will be using that virtual account to understand this further and make sure I master the techniques. And then, we'll see what happens! Will definitely keep you guys updated.
Are you an options investor? what is your experience like?
If not-- is this something you feel you'd be interested in?
Thank you for reading!
And as always, cheers to profits.
Book was sent to me after being part of a tdameritrade seminar. I was not asked to write this post. No monetary compensation was received from tdameritrade for this post. all opinions are honest, personal, and my own. It's truly a great book and I felt important to share a review with my readers.