witey TRADING aovaNTAGE ‘Te ints Png od Gee Prt Landy Hi ‘die Sem Meds ard Baton Dery Kian Pelee ‘Boer Bong Sac oon ote THE NEW OPTIONS MARKET FOURTH EDITION Max ANSBACHER ® ‘John Wiley & Sons, Inc. New York ¢ Chichester © Weinheim + Brisbane + Singapore + TorontoCONTENTS Preface tothe Fourth Eton .. recent Induction soe seeeessesees vo CHAPTER 1: The Fundamentals of Stock Options settee CHAPTER 2: Buying CALS «ses eeeseseeeeeeee aT CHAPTER 3: Selling Covered Calls. eeeeeeeee 6 CHAPTER 4: Selling Naked CIS «es eeeeeceee 98 coarTeR Buying and Seling Pate. CHAPTER 6: Spreads, Sradles, and Combinations «.-.++.++e+++ 157 CHAPTER 7: Option Commissions 2s. ceeeseseeeereeseees 215 (OAPTER 8 Taxation of Stock Options 2.2 +csseseeeeseees 225 Anpentines A.W Sites for Options Tes es. seseseesees as 8. Stock and Options Brokers «2.2.25 foneeeses 351 Compute Software Programs : 2255 The Ansbacher index ee eee es iy £. Managed Options Investment Programs... 2. cs2eececesees 263 F. Puta Equivalency Table vos esseececececeeeeeenees 265, 6. Option Symbols «ee eeseseesesessesesseseseeesenees 267cc contents Stack Commission Schedule in Cents per Share». 1. rksheet for Computing Retumn on Investment from Covered Option writing, on a Cash Basis and on 8 Margin ass vss... 27% 3. The 10 Blogest Options Mistakes «2. cess cseoe 28 Options Strategies Ranke from Extreme Bullisnes Erreme BeaishaesS ses sevesssetesseeen = 205 lossy of Terms ees eeseveseeeseeueee 287 269 Index eee eseseseesee 297 PREFACE TO THE FOURTH EDITION {have now been working a8 an options professional for 25 years and | am mare convinced than ever that there is nothing the secur word that ean bring investors and speculatars so much Tun, excite ment, challenge, prof, heartbreak, and diversity as options. Options ‘fe iterally inte poribilites when one multiplies all the strate Bis, strike prices, and durations by all the stocks and stock indexes that exe, In fact, the world of options isso diverse that to say that people aro in options iso tell us absolutly nothing about what the ing Are they using every bit of spare eash they have to buy eallson a hot new stack which Uhey have heard from top source is going to ‘cme out with blockbuster earnings next week? Or are they ta 1 lite extea eas from a stck portfolio by slling covered calls? Are ‘hey using intricate spreads to capitalize on short-term price varia tions in options? Have they desided to take on the risks of selling un covered options because they belive that that is the best way to make money fom options? Or are they taking most ofthe risk out af thie stock portfolios by buying puts on them? And this just brushes the surface ofthe posites Inthis ook we will utline every one of these strategies in clea, simple language end provide detailed examples so that you wil be ble to see exactly how they each work. We will then explain how you fan make money from them and how you ean lose mone. And then I wl give you ms own rules of erate, which represent what L have learned from my sears inthe business about oto shi the ods in ‘your favor at much as possible wo that you have the best probabilities ‘otheing 8 winner