39 lines
2.9 KiB
Plaintext
39 lines
2.9 KiB
Plaintext
xx Preface
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stocks in the past few years. Also, the margin rules were changed in 2000, and those
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changes are noted throughout the book.
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Those chapters dealing with the sale of options - particularly naked options -
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have been expanded to include more discussion of the way that stocks behave and
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how that presents problems and opportunities for the option writer. For example, in
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the chapter on Reverse Spreads, the reverse calendar spread is described in detail
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because - in a high-volatility environment - the strategy becomes much more viable.
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Another strategy that receives expanded treatment is the "collar" - the purchase
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of a put and simultaneous sale of a call against an underlying instrument. In fact, a
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similar strategy can be used - with a slight adjustment - by the outright buyer of an
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option (see the chapter on Spreads Combining Puts and Calls).
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I am certain that many readers of this book expect to learn what the "best"
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option strategy is. While there is a chapter discussing this subject, there is no defin
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itively "best" strategy. The optimum strategy for one investor may not be best for
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another. Option professionals who have the time to monitor positions closely may be
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able to utilize an array of strategies that could not possibly be operated diligently by
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a public customer employed in another full-time occupation. Moreover, one's partic
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ular investment philosophy must play an important part in determining which strat
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egy is best for him. Those willing to accept little or no risk other than that of owning
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stock may prefer covered call writing. More speculative strategists may feel that low
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cost, high-profit-potential situations suit them best.
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Every investor must read the Options Clearing Corporation Prospectus before
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trading in listed options. Options may not be suitable for every investor. There are
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risks involved in any investment, and certain option strategies may involve large risks.
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The reader must determine whether his or her financial situation and investment
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objectives are compatible with the strategies described. The only way an investor can
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reasonably make a decision on his or her own to trade options is to attemptto acquire
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a knowledge of the subject.
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Several years ago, I wrote that "the option market shows every sign of becom
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ing a stronger force in the investment world. Those who understand it will be able to
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benefit the most." Nothing has happened in the interim to change the truth of that
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statement, and in fact, it could probably be even more forcefully stated today. For
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example, the Federal Reserve Board now often makes decisions with an eye to how
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derivatives will affect the markets. That shows just how important derivatives have
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become. The purpose of this book is to provide the reader with that understanding
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of options.
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I would like to express my appreciation to several people who helped make this
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book possible: to Ron Dilks and Howard Whitman, who brought me into the bro- |