Options Trading for the
Conservative Investor: Increasing Profits Without Increasing
Your Risk (Paperback)
by Michael C. Thomsett
By Craig L. Howe "The
Pointed Pundit" (Darien, CT United States)
This review is from:
Options Trading for the Conservative Investor: Increasing
Profits Without Increasing Your Risk (Financial Times
Prentice Hall Books) (Hardcover)
Most conservative and moderate investors will tell you they
seek increased returns without adding additional levels of risk
to their portfolios.
They are not adverse to risk; they just seek to control it. In
short, they seek to
1. Preserve spending power after both inflation and taxes.
2. Seek to avoid unacceptable market, liquidity and
diversification risks.
3. Protect profits without loss of invested positions.
If you fit this investment profile, then
Michel C. Thomsett has written this book for you. In it he
demonstrates how carefully selected options strategies can help
you consistently improve your returns without adding additional
portfolio risk. Options, he argues, do not have to be exotic,
high risk or complicated. In fact, they can be employed as a
powerful tool to reduce risk.
He wisely sets his ground rules early in the book. They
are:
1. Limit options activity to stocks you have pre-qualified.
2. Have faith the market with rise over time.
3. Accept the value of fundamental analysis.
4. If trade down, be prepared to add to your position.
5. Believe there are an adequate number of stocks which will
meet your investment standards.
Thomsett's book is well-written and illustrated - even if you
are not familiar with options. In 255 pages he covers options
strategies suitable for conservative investors. He includes
covered call writing, contingent purchase strategies, rescue
strategies to use when markets fall and combination strategies
that produce cash to bolster current income.
If conservative and moderate investors remain true to their
goals, options are a wonderful tool. However, Thomsett is
experienced enough to acknowledge that deep in the heart of
every market hedger is a speculator eager to spread his or her
wings.
Stick with the author's ground rules and you will avoid the
market's playground of temptations.
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