Using Options To Buy Stocks - Build Wealth With Little Risk And No Capital

Build Wealth with Little Risk and No Capital......Page 2
Library of Congress Cataloging- in- Publication Data......Page 3
Volatility and Premiums......Page 4
Index......Page 5
PREFACE......Page 6
PART ONE - THE BASIC APPROACH......Page 10
What Is an Option?......Page 11
Features of Standardized Equity Options......Page 14
Unit of Trade.......Page 15
Style.......Page 16
Option Class and Series......Page 17
Premiums......Page 18
Option Codes......Page 19
Option Cycles......Page 23
Introduction......Page 25
LEAPS......Page 27
LEAP Premiums......Page 28
Commissions......Page 29
LEAPS Available......Page 33
LEAP Symbols.......Page 34
Position Limits.......Page 35
Using Options to Buy Stocks......Page 36
The Underlying Premise......Page 57
The Fundamental Approach......Page 58
Margin and Collateral......Page 60
Selection and Timing......Page 61
Tactical Decision Making......Page 62
Selling Puts versus Good- till- Canceled Orders......Page 63
Sometimes Life Deals You Lemons......Page 64
Risk Reduction Using Spreads......Page 65
Using Rollouts to Recover......Page 68
A Double- Glove Approach......Page 69
Protective Stops......Page 70
Timing the Market......Page 72
Introduction......Page 73
Examples......Page 74
Collateral Requirements......Page 75
Who Can Deal in Options?......Page 76
Establish Your Comfort Zone......Page 78
Earthquakes Happen......Page 79
Covered Put Writing......Page 82
Trading......Page 84
Exercise......Page 85
Assignment......Page 86
Recent History of Tax Treatment of Capital Assets......Page 88
What Lies Ahead......Page 89
Tax Implications for Option Holders......Page 90
Tax Implications for Option Writers......Page 92
Other Tax Implications......Page 98
PART TWO - RISK, REWARD, AND SAFETY......Page 100
Reaction and Challenge......Page 101
Methodology......Page 102
The Simulation Model......Page 104
The Results......Page 119
Introduction......Page 125
The B Minimum Universe......Page 126
The A- Minimum Universe......Page 127
Summary of Results......Page 134
Introduction......Page 135
One- Step OTM LEAPS on the A- Minimum Universe......Page 136
Two- Step OTM LEAPS on the A- Minimum Universe......Page 137
Summary of Results......Page 146
Introduction......Page 149
Procedure......Page 150
Rolling At- the- Money LEAPS......Page 151
Rolling One- Step Out- of- the- Money LEAPS......Page 152
Rolling Two- Step Out- of- the- Money LEASPS......Page 153
One- Step Out- of- the- Money Results.......Page 166
Two- Step Out- of- the- Money Results.......Page 167
Procedure......Page 168
At- the- Money LEAPS on the B+ Minimum Universe......Page 169
At- the- Money LEAPS on the A- Minimum Universe......Page 170
One- Step OTM LEAPS on the A- Minimum Universe......Page 171
Two- Step OTM LEAPS on the B+ Minimum Universe......Page 172
Two- Step OTM LEAPS on the A- Minimum Universe......Page 173
Summary......Page 207
At- the- Money Results......Page 209
Two- Step Out- of- the- Money Results......Page 210
Introduction......Page 211
Far- Term LEAPS Alone Strategy......Page 212
Mix- and- Match Strategies......Page 214
Moderate Mix- and- Match Strategy......Page 215
A Word of Caution......Page 220
Introduction......Page 221
The Full Universe......Page 222
The B+ Minimum Universe......Page 223
The A- Minimum Universe......Page 224
Conclusions......Page 233
PART THREE - VOLATILITY AND PREMIUMS......Page 234
Introduction......Page 235
Example......Page 236
Volatility......Page 237
Stock Growth and Volatility......Page 257
Stock Growth and In- the- Money Probabilities......Page 258
Introduction......Page 261
The Black- Scholes Formula for Puts......Page 262
The Effect of Dividends on Option Premiums......Page 263
Numerical Example......Page 264
Implied Volatility......Page 265
Numerical Examples......Page 268
The Effect of American- Style Options......Page 271
Numerical Example......Page 273
Computer Program for American Put Premiums......Page 275
Numerical Examples......Page 0
Computer Program for American Call Premiums......Page 282
PART FOUR - ADDITIONAL RESOURCES......Page 289
Option Quotes......Page 290
Stock- Screening Sites......Page 293
Market News......Page 294
Portals......Page 295
Research and Analysis......Page 296
Online Option Pricers......Page 298
Message Boards......Page 299
Internet Providers......Page 300
17 — Selected Bibliography......Page 301
APPENDIX A — EUROPEAN PUT PREMIUMS......Page 304
APPENDIX B — AMERICAN PUT PREMIUMS......Page 331
APPENDIX C — IN- THE- MONEY PROBABILITIES......Page 436
C......Page 525
D......Page 526
E......Page 527
I......Page 528
N......Page 529
O......Page 530
P......Page 531
U- V......Page 532
W......Page 533