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Put Options: How to Use This Powerful Financial Tool for Profit & Protection » (First Edition)

Book cover image of Put Options: How to Use This Powerful Financial Tool for Profit & Protection by Jeffrey M. Cohen

Authors: Jeffrey M. Cohen
ISBN-13: 9780071416658, ISBN-10: 007141665X
Format: Hardcover
Publisher: McGraw-Hill Companies, The
Date Published: August 2003
Edition: First Edition

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Author Biography: Jeffrey M. Cohen

Jeffrey M. Cohen is founder of SafetyNetTrading.com as well as a hedge fund manager, continuing education instructor, and tax and financial planning expert. A popular speaker, Cohen has appeared on CNBC, CBS MarketWatch, and Lifetime.

Book Synopsis

A Revolutionary Program for Dramatically Improving Your Stock Market Performance While Insuring Against Market Freefalls

To increase their overall stock market returns, investors have been told for decades that they must first increase their risks. Problem is, millions of investors who bought into that line of thinking were caught blindside by recent market downturns—without ever knowing there was a better way.

Put Options outlines a better way, one that isn't built on pie-in-the-sky, get-rich-quick premises and promises. It introduces a powerful way to trade and invest that allows you to participate in stock market profits without incurring undue risk. The secret is in using put options, versatile instruments that allow you to increase per-dollar returns while hedging against sudden and devastating market downturns. Let Put Options show you how to:

  • Profit even when you've guessed wrong
  • Weather down markets with your equity virtually intact
  • Invest only in the world's most well-known, successful companies

The potential rewards of owning stock are substantial; so too, as recent markets have proven, are the risks. Let Put Options show you a new way to invest, one that significantly limits your downside risk when compared to stock ownership as it helps you pocket consistent profits in today's challenging financial marketplace.

"I think one of the best gifts any investor could bestow upon his or her financial planner or stockbroker is a copy of this book."—Donald Moine, Ph.D., Financial Planning Columnist, From the Preface

If you are like most investors, you would leap at the opportunity to earn consistent double-digit stock market returns with greatly reduced risk. Put Options introduces you to an innovative, proven program designed to do just that—produce consistent and regular stock market returns while minimizing the risk of losing those returns during a down market.

The secret, in a nutshell, is in implementing a low-maintenance, easy-to-follow program of selling puts on quality stocks while hedging those investments by buying puts on the overall market. Far easier to implement and track than it sounds, this strategy is frequently used by institutional investors, whose reputations and careers depend on garnering decent returns without assuming unnecessary risk. Yet, until now, it was considered too complex and high-level for individual investors and traders.

Put Options explains this proven technique in terms that virtually any investor can understand and implement. The rare investment book that supports its claims by providing the actual results of actual trades using actual household-name stocks, Put Options provides a step-by-step template on how you can use author Jeffrey Cohen's SafetyNet program to consistently:

  • Profit through the use of puts, one of today's most versatile investment tools
  • Lower your all-important break-even points in up, down, and sideways markets
  • Protect yourself—and even take home a profit—when stock prices go down

Financial advisors and stockbrokers will do everything in their power to steer you away from option writing as "too risky." Yet they have no problem recommending high-flying stocks they know little or nothing about, then leaving you to fend for yourself when negative news sends those stocks crashing to the ground..... And you can't afford that kind of advice.

Put Options will change the way you invest by literally changing the way you view investment. It shows you how to invest in today's best blue-chip stocks in such a way as to profit when they do well while protecting yourself when they do poorly. Packed with facts, figures, and actual examples of SafetyNet in action, it unquestionably supports the bottom-line premise that writing options can, if done correctly, be far safer than owning shares of stock—and then shows you exactly how to do it.

Jeffrey M. Cohen is founder of SafetyNetTrading.com as well as a hedge fund manager, continuing education instructor, and tax and financial planning expert. A popular speaker, Cohen has appeared on CNBC, CBS MarketWatch, and Lifetime.

Table of Contents

Foreword
Preface
Acknowledgments
Introduction1
Pt. 1An Overview of the Safetynet Trading System
Ch. 1Understanding Risk: You Can't Avoid What You Don't Understand19
Ch. 2Using Options to Reduce Risk: Increase Your Odds of Successful Trading23
Ch. 3Using Someone Else's Money to Insure Your Assets: A Tranquilizer for Your Portfolio35
Pt. 2Option Trading: A Detailed Tutorial
Ch. 4Understanding Options: They're Simpler Than You Think47
Ch. 5Implementing the System: The Devil Is in the Details69
Ch. 6Choosing Your Universe of Stocks: Stick with the Greats75
Ch. 7Establishing Support Levels: How Low Is Low Enough?101
Ch. 8Pulling the Trigger: When to Take a Position109
Ch. 9Insuring against a Market Crash: Protection to Help You Sleep at Night125
Ch. 10Managing Your Portfolio to Maximize Your Profits133
Ch. 11Learning from My Costly Mistakes: Eight Rules That Will Save You Money and Frustration141
Ch. 12About Those Critics: Selling Puts Is Safer Than Buying Stock - Despite What Your Broker Says147
Ch. 13Choose Your Own Risk Tolerance: More Risk, More Reward - The Choice Is Yours159
Ch. 14Best Sources for Stock Research: The Internet Can Help You Be a Better Guesser167
Pt. 3Historical Examples and Current Trading Opportunities
Ch. 15History Doesn't Lie: Indisputable Proof That Investors Can Lower Their Risk173
Ch. 16Examples from Today's Market: The Truth Never Changes179
Ch. 17Back Testing the Dow: A 10-Year Back Test on Every Stock in the Dow Jones Industrial Average217
Afterword221
App. AHistorical Examples227
App. BShort Option Symbols229
App. CNasdaq-100 Index Tracking Stock (QQQ)233
App. DCurrently Available Options237
Glossary299
Recommended Reading303
Index305

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