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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Serie: Wiley Trading Series
- Sprache: Englisch
Investors are increasingly turning to LEAPS (Long-Term Equity AnticiPation Securities) to combine the advantages of options trading with the benefits and security of a longer time frame. Here, Marty Kearney of the Options Institute at the Chicago Board Options Exchange examines the wide range of practical and effective strategies for managing LEAPS, and shows you how to match these strategies to your own risk profile. Learn how to tailor your options program using LEAPS and devise key strategies to improve profitability, protect paper profits, and avoid losses in long stock positions. * Use LEAPS to produce monthly income * Identify key elements in determining LEAPS prices * Master LEAPS symbols and expiration cycles * Insure your portfolio against market pullbacks * Manage year-end tax consequences * Establish security positions with little risk Kearney walks you through the inner workings of LEAPS and shows you compelling strategies for incorporating them into your overall approach to market. With instant access to the online video, you'll have everything you need to begin profiting with LEAPS.
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Seitenzahl: 127
Veröffentlichungsjahr: 2012
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Table of Contents
LEAPS Trading Strategies
Publisher’s Preface
How to Use this Book
Meet Marty Kearney
Introduction: Profits from LEAPS Options
Chapter 1: A Brief Review of the Basics
Important Terms
Differences: Securities Versus Options
A Brief History of Options
Options Symbols
Stock Symbols
Meaningful Strikes and Expiration Style
Options/Leaps Pricing
Self-Test Questions
Chapter 2: Why Bother with LEAPS?
Getting Time, Doing Time
Action, Reaction – Another Leaps Benefit
Pros and Cons
Self-Test Questions
Chapter 3: Using LEAPS in a Gifting Program
The Three-Year Plan
Self-Test Questions
Chapter 4: LEAPS vs. Stock Ownership
Limiting Your Risks
Delta As A Factor of Pending Expiration
The Importance of Setting Targets
Pros and Cons Summary
Self-Test Questions
Chapter 5: Covered Writing with LEAPS
Covered Write Strategy
Evolving Value Scenarios
The Long-Term Advantage
Important Features of The Strategy
Self-Test Questions
Chapter 6: LEAPS Protective Puts and Collars
The Inevitable Tax Complication
The Protective Put
Pros and Cons of Leaps Puts
The Collar Strategy
Puts As Training Wheels On Your Portfolio
Pros and Cons of Leaps Collars
Self-Test Questions
Chapter 7: A Year-End LEAPS Tax Strategy
The Thanksgiving-Christmas-Super Bowl Spread
Getting Back Into The Long Stock Position
Flexibility in Year-End Strategies
Flexibility For Larger Portfolios
Self-Test Questions
Glossary
Copyright © 2009 by Marty Kearney
Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom.
For general information about our other products and services, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.
Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.
Library of Congress Cataloging-in-Publication Data:
PUBLISHER’S PREFACE
What you have in your hands is more than just a book. A map is simply a picture of a journey, but the value of this book extends well beyond its pages. The beauty of today’s technology is that when you own a book like this one, you own a full educational experience. Along with this book’s author and all of our partners, we are constantly seeking new information on how to apply these techniques to the real world. The fruit of this labor is what you have in this educational package; usable information for today’s markets. Watch the video, take the tests, and access the charts—FREE. Use this book with the online resources to take full advantage of what you have before you.
If you are serious about learning the ins and outs of trading, you’ve probably spent a lot of money attending lectures and trade shows. After all the travel, effort, expense, and jet lag, you then have to assimilate a host of often complex theories and strategies. After thinking back on what you heard at your last lecture, perhaps you find yourself wishing you had the opportunity to ask a question about some terminology, or dig deeper into a concept.
You’re not alone. Most attendees get bits and pieces out of a long and expensive lineage of lectures, with critical details hopefully sketched out in pages of scribbled notes. For those gifted with photographic memories, the visual lecture may be fine; but for most of us, the combination of the written word and a visual demonstration that can be accessed at will is the golden ticket to the mastery of any subject.
Marketplace Books wants to give you that golden ticket. For over 15 years, our ultimate goal has been to present traders with the most straightforward, practical information they can use for success in the marketplace.
Let’s face it, mastering trading takes time and dedication. Learning to read charts, pick out indicators, and recognize patterns is just the beginning. The truth is, the depth of your skills and your comprehension of this profession will determine the outcome of your financial future in the marketplace.
This interactive educational package is specifically designed to give you the edge you need to master this particular strategy and, ultimately, to create the financial future you desire.
To discover more profitable strategies and tools presented in this series, visit www.traderslibrary.com/TLEcorner.
As always, we wish you the greatest success.
Chris Myers
President and Owner
Marketplace Books
HOW TO USE THIS BOOK
The material presented in this guide book and online video presentation will teach you profitable trading strategies personally presented by Marty Kearney and the Options Institute Council. The whole, in this case, is truly much greater than the sum of the parts. You will reap the most benefit from this multimedia learning experience if you do the following.
WATCH THE ONLINE VIDEO
The online video at www.traderslibary.com/TLEcorner brings you right into Kearney’s session, which has helped traders all over the world apply his powerful information to their portfolios. Accessing the video is easy; just log on to www.traderslibrary.com/TLEcorner, click Leaps Trading Strategies: Powerful Techniques for Options Trading Success by Marty Kearney under the video header, and click to watch. If this is your first time visiting the Education Corner, you will be asked to create a username and password. It is all free with the purchase of this book and will be used when you take the self-tests at the end of each chapter. The great thing about the online video is that you can log on and watch the instructor again and again to absorb his every concept.
READ THE GUIDE BOOK
Dig deeper into Kearney’s tactics and tools as this guide book expands upon his video session. Self-test questions, a glossary, and key points help ground you in this knowledge for real-world application.
TAKE THE ONLINE EXAMS
After watching the video and reading the book, test your knowledge with FREE online exams. Track your exam results and access supplemental materials for this and other guide books at www.traderslibrary.com/TLEcorner.
GO MAKE MONEY
Now that you have identified the concepts and strategies that work best with your trading style, your personality, and your current portfolio, you know what to do—go make money!
MEET MARTY KEARNEY
Marty Kearney is widely respected in the investing world as an expert on options and derivatives. As a senior instructor with the Options Institute for over 12 years, he has taught thousands of individual traders, exchange members, trading desks, and hedge funds on the many uses of options.
Marty spent years testing his ideas, perfecting his skills while trading for his own account, and communicating his successful techniques through classes and online instructional programs offered by the Options Institute.
Marty has a varied background. He was the marketing director for the NCR Corporation in the 1970s before joining the Chicago Board Options Exchange (CBOE). Today, he is the senior staff instructor of the Options Institute, the educational arm of the CBOE. He became an independent market maker in 1981. Eleven years later he co-founded PTI Securities, a CBOE member firm. There, Marty implemented hedging strategies based on the use of listed options. He also authored PTI’s weekly strategies letter for four years and composed the daily comments appearing on the PTI website. During his four years with PTI, he remained a part-time trader on the floor.
Marty is a regular contributor to a range of news services and industry publications, including Reuter’s, CNBC, Bloomberg, CBS Radio Network, Barron’s, Fortune, Ticker Magazine, and Stock Futures and Options. He has written for Derivatives Week and has appeared on many television programs. In addition to serving as an industry spokesman, Marty helps brokers develop new business using conservative options strategies. He is co-author of the successful book, Understanding LEAPS, and was a contributing author to Options: Essential Concepts and Strategies (3rd Ed.). He has served on many CBOE committees, including the Arbitration Committee (1984 to 1996).
Marty’s educational background includes a BS from Saint Mary’s University of Minnesota. He also pursued his MBA at Lake Forest Graduate School of Management. In 2006, he completed a three-year SII/SIA program at the Wharton School of the University of Pennsylvania.
In addition to his duties at the CBOE, Marty is also an instructor for the Options Industry Council (OIC). The OIC is an options educational organization backed by all the U.S. exchanges and the Options Clearing Corporation (OCC).
Introduction
Profits from LEAPS Options
The essential advantage of trading options is derived from the idea described by the old adage, “there are many ways to skin a cat.” Novice traders are aware of one primary approach to investing: buying stock, holding it until it gains value, and then selling for a profit. While this basic approach does not always work out as planned, it is the inevitable starting point.
Soon after diving into basic trading, they hear about “going short” or “speculating in futures,” two ideas most novice traders believe increase risk. They might be attracted to mutual funds or exchange traded funds to diversify their risks and let someone else make the actual decisions.
Through the process of deciding how to expand beyond the basic strategy of buying-holding-selling shares of stock, they will eventually hear about options.
To some, options look like a craps table, with so many ways to play a throw of the dice. And in some respects, especially the highest-risk options strategies, it is a crap shoot. Looking at options in that light, however, misses the big picture. Options offer a broad spectrum of possibilities, and the many ways that people can use them—especially long-term or LEAPS options—can improve portfolio management, increase cash income, and reduce risks. I like using LEAPS options as part of a comprehensive and broad portfolio management strategy and not as a speculative play on a wild throw of the dice. Believe me, there are a variety of ways to use options, and you will see that many are designed to protect profits and help you grow capital.
THE RULES OF THE GAME
First, let’s go over some basic rules of the game. Though options have been around in one form or another for several centuries, the modern era of options trading didn’t begin until 1973, when standardized equity options were first introduced by the Chicago Board Options Exchange (CBOE). At that time, contracts were available on less than three dozen stocks, and trading was conducted in crowded pits by shouting floor brokers using hand signals and paper confirmation slips. Today, standardized options are available on roughly 2,800 stocks, 800 ETFs, and 200 indices; the average daily volume in 2007 was 11.4 million contracts, 14.7 million in 2008. Well over 90 percent of those transactions are done electronically, with orders matched by computer and trades completed in a matter of seconds.
In other words, thanks to increased experience, improved computer technology, and electronic market systems, option trading has become fast, efficient, and relatively low cost—even for individual investors. But for those who’ve had only limited exposure to options and the arenas in which they trade, we’ll review some of the basics.
What exactly is an option? Though there are a few variations, the basic definition is this:
An option is a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option is a security, just like a stock or bond, and constitutes a binding contract with strictly defined terms and properties.
As securities, options fall into a class known as derivatives. A derivative is a financial instrument that derives its value from the value of some other financial instrument or variable. For example, a stock option is a derivative because it derives its value from the value of a specific stock. An index option is a derivative because it derives its value from its relationship to the value of a specific market index, such as the S&P 500. The instrument from which a derivative derives its value is known as its underlying asset.
With options, there are two basic types (or classes)—calls and puts. Both are intangible contracts with a limited life. They expire at some point in the future, and after they expire, they are considered worthless.
A call grants its owner the right, but not the obligation, to buy 100 shares of a specified stock (the underlying security) at a fixed price. That option can be exercised at any time between the purchase of the call and its expiration, regardless of how high the stock’s market value moves. As a rule, purchasers of call options are bullish; they expect the underlying stock’s price to rise in the period leading up to the option’s specified expiration date. Conversely, sellers of calls are usually bearish; they expect the price of the underlying stock to fall—or, at least, remain stable—prior to the option’s expiration. However, there may be other reasons for selling calls, such as the structuring of strategies like spreads or covered writing.
