The Stock Option Income Generator How To Make Steady Profits by Renting Your Stocks

by Friedentag, Harvey C.

• ISBN13: 9780470481608
• ISBN10: 0470481609
• Edition: 1st
• Format: Hardcover
• Copyright: 2009-10-05
• Publisher: Wiley

Summary

The Stock Option Income Generator provides a low-stress tactic to make predictable profits no matter what the state of the overall market. Harvey Friedentag, a registered investment advisor who has been using this strategy successfully for more than 20 years, shows how to pick stocks and then sell call options against those stocks to generate a constant source of income. With this book, the reader will learn how to: Make consistent profits in the stock market Protect stock holdings from price declines Buy more stocks for less money Profit from big market moves Profit in sideways markets Receive tax benefits from an option income portfolioFriedentag's strategy is ideal for people who want to generate better returns than the overall market averages, but are unwilling to take on too much risk. Clearly, simply, and with examples, Friedentag walks readers through the process of buying the right stock, selling the right call option, and managing the position through the ups and downs of the market. He then shows how to create an option income portfolio and how to manage the portfolio in a way that minimizes taxes and maximizes overall growth.

Author Biography

Harvey C. Friedentag is an investment adviser and money manager. He is certified as a Federal Court expert witness on stock trading, options, and other derivatives. Specializing in covered call writing, Friedentag has been managing money since 1986 and has consistently generated annual returns of more than 15%. He is also the author of the book Investing without Fear, which has been called, "a gem of a book for serious option writers." Friedentag serves as President of the Contrarian Investment Club in Denver, Colorado.

Table of Contents

Preface	p. xiii
Acknowledgments	p. xvii
Fear and Ignorance	p. 1
The Stock Market Crash of 1929	p. 2
Investment Knowledge + Stock Market = Profits	p. 6
Understanding Investor Behavior	p. 6
The Crash of 2008	p. 7
What to Do First	p. 8
My Investment History	p. 10
Summary	p. 13
Invest with Confidence	p. 15
What Is Investing?	p. 18
Asset Allocation	p. 18
Risk versus Reward: Finding Your Balance	p. 19
The Three Strategic Factors	p. 22
Stocks: The Long-Term Core	p. 23
Defining Investing and Fear	p. 29
Market Madness: Black Monday, October 19, 1987	p. 31
Market Anxiety Is Caused by Many Factors	p. 32
Year 2008: The Collapse of the Stock Market	p. 32
Investing and Gambling	p. 34
Investment Policy Statement	p. 35
Discipline Can Be Really Good for You	p. 35
An Overview of How to Invest	p. 37
Inflation	p. 38
Investing in Stocks	p. 39
Contrarian Investing	p. 48
Growth Stock Investing	p. 48
Common-Sense Stock Selection	p. 49
Dividend Income Stock Investing	p. 50
Keep in Mind	p. 50
Stock Picking, Research, and Annual Reports	p. 53
Questions for Investment Decisions	p. 54
Sources of Investment Information	p. 55
Trade Press	p. 57
Investment Clubs	p. 58
Reading the Annual Report	p. 59
The Quarterly Report	p. 66
Changing the Rules	p. 66
Annual Meetings	p. 67
Stock Selection Summary	p. 68
How to Read the financial News	p. 71
Guide to the Economy and the Stock Market	p. 74
Your Wallet Can Be a Leading Economic Indicator	p. 76
The Art of Investing, Risk, and Reward	p. 79
Stocks or Bonds?	p. 80
Market Timing	p. 81
Avoid Common Investment Risks	p. 82
Risk Breeds Fear	p. 83
General Investment Strategies	p. 85
The Tools of Contrarian Investing	p. 89
Classic Stock Market Statements	p. 89
Madness of Crowds	p. 90
Take Advantage of the Pros	p. 92
Insider Information	p. 95
Insider Trading Is Not Always Illegal	p. 96
Buy, Sell, or Hold?	p. 97
Performance Records	p. 100
Investing Considerations	p. 100
Transaction Costs Compared	p. 101
To Make Money in the Stock Market, Don't Lose Any	p. 102
Dividend Reinvestment Plans	p. 105
Dividend Reinvesting Plans and Dollar Cost Averaging	p. 107
The Compounding Effect	p. 108
DRPs: Advantages for the Investor	p. 108
DRPs: Advantages for the Companies	p. 109
Using DRPs to Select Stocks	p. 109
Safety with a Small Investment	p. 110
Dividend Reinvestment Plans and the Compounding Effect	p. 110
The Dividend Debate	p. 110
Picking and Dealing with a Stockbroker	p. 113
We Invest to Make Money	p. 114
The Buck Starts Here	p. 115
Shocking Facts: Is Research from Wall Street Useless, or Worse?	p. 116
The Stocks in the Dow Jones Averages	p. 118
Today's Bargains Can Be Tomorrow's Winners, and Today's Winners Can Be Tomorrow's Losers	p. 120
Why Use a Discount Broker?	p. 121
Understanding Procedures	p. 122
Advanced Investing and Goal Setting	p. 131
Financial Failure	p. 132
Money x Return x Time = Your Goal	p. 134
Your Money	p. 135
Your Return	p. 136
Your Time 136
Investment Risks	p. 138
Risk-Reward Relationship	p. 139
Building Your Portfolio	p. 141
How the Pros Choose Stocks	p. 142
Benjamin Graham, the Value Investor	p. 143
How Other Professionals Invest	p. 145
Value versus Stock Price	p. 146
Buying and Selling Stocks	p. 147
Portfolio Management Guidelines	p. 150
A Reliable Way to Invest	p. 155
Basic Investment Guidelines	p. 159
The Realities of Investing: Mind over Matter	p. 159
Don't Panic	p. 160
Do Not Try to Predict the Market	p. 160
Capitalize on Stock Market Anxiety and Euphoria	p. 162
Remember, No One Becomes Poor Taking a Profit	p. 163
Understanding Bankruptcy	p. 164
Key Considerations	p. 166
Always Remember	p. 168
Options and the Stock Market	p. 171
What Is an Option?	p. 171
The Business of Options	p. 172
Options Share Many Similarities with Common Stocks	p. 173
History of Options	p. 174
Function of Options	p. 175
Factors Affecting Option Valuation	p. 176
The Option Premium	p. 179
The Option Strategy	p. 180
Some Questions and Answers	p. 181
Getting Started	p. 182
Why Sellers Sell Calls: Some Strategies	p. 183
Option Exercise	p. 186
Option Fundamentals	p. 187
Using Options and Margin	p. 191
What Is Margin?	p. 192
Avoid the Premium Trap	p. 192
Put-Call Ratios	p. 193
Option Quotes	p. 194
Selling Options: Prudent Investing Method	p. 194
Options and Potential Returns	p. 197
Naked Option Writing	p. 198
Starting a Covered Call Program	p. 198
The Pricing of Options	p. 199
Determining the Best Time Value	p. 202
Determining the Best Strike Price	p. 203
Determining the Best Underlying Stock	p. 205
When to Take Action	p. 206
Understanding Published Option Premiums	p. 207
Option Symbols	p. 209
The Standard Method of Using Options	p. 211
My Method of Using Options	p. 211
Margin: The Credit You Can Use	p. 215
Advantages of Margin	p. 217
The Margin Account and Buying Power	p. 218
Margin Account Maintenance	p. 219
Margin Interest	p. 220
Important Margin Principles	p. 222
Opening a Margin Account	p. 222
Basic Ideas and Terminology	p. 222
Portfolio Valuation	p. 23
Portfolio Financials	p. 223
Margin or Maintenance Call	p. 224
Converting Dividends into Capital Gains	p. 224
Using Margin for Personal Purchases	p. 224
Managing an Option Income Portfolio	p. 227
The Writing Possibilities	p. 231
Option Selection for Option Writing	p. 233
Selling Time Value	p. 234
Selling a Covered Call Option	p. 235
Stockbrokerage Commissions	p. 237
Buy and Write Strategy (Buy-Write)	p. 237
Formula for Stock and Option Selection	p. 239
The Option Buyer	p. 240
Proof That an Option Income Portfolio Is a Winner	p. 240
Follow-Up Action	p. 241
Periodical Review of Portfolio Equity Holdings	p. 242
Option Income Portfolio Review	p. 245
Option Income Portfolio as a Tax Shelter	p. 247
Investment Definitions	p. 247
The Option Income Portfolio and Taxes	p. 249
Option Contract Closing Transaction	p. 250
Tax Deferral	p. 250
Tax Gains or Losses	p. 251
Capital Loss or Gain Bank	p. 252
Options: Standard Operating Procedures	p. 255
Rule of Thumb	p. 256
No Time = No Time Value	p. 256
Stock Price Goes Down	p. 258
Stock Price Stays the Same	p. 258
Stock Price Goes Up	p. 259
Selling and Buying Back Calls: One Stock for One Year	p. 262
Option Income Portfolio Procedure	p. 263
So Why Aren't You Selling Options?	p. 267
Leaps	p. 269
Leaps Options for a Longer Term	p. 270
Leaps Pricing	p. 271
Leaps Symbols	p. 273
Conclusions	p. 279
Fear, Greed, Hope, and One's Self	p. 280
Traits of the Winner	p. 281
Traits of the Loser	p. 281
The Surprising New Shape of the Economy	p. 282
Madness of Crowds Returns	p. 284
The Good News	p. 286
Remember Time Plus Money for Successful Investing	p. 287
Appendix Investing in Citigroup through the Years	p. 289
Citicorp: A Financial History	p. 289
Contrarian Investment Club History	p. 291
Resources	p. 295
Investing Books	p. 295
Option Books	p. 297
Information Links	p. 298
About the Author	p. 301
Index	p. 303
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