The Four Biggest Mistakes in Option Trading

by Kaeppel, Jay

• ISBN13: 9781592802555
• ISBN10: 1592802559
• Edition: 2nd
• Format: Paperback
• Copyright: 2006-11-20
• Publisher: Wiley

Summary

With over 50,000 copies in print for the first edition, Kaeppel?s insight has undoubtedly made its mark in the options world. Now, he strikes again with an updated and more comprehensive look at those pesky mistakes that traders continue to make in trading options. In easy-to-understand terms, he systematically breaks down each problem and offers concrete and practical solutions to overcome it in the future. There are big profits to be made in options trading. By avoiding the four most common and most costly mistakes the majority of traders make, you?ll be set to win big. System and software developer Jay Kaeppel helps you thoroughly understand each mistake before showing you how to avoid them in future trades. In this new, color edition, you?ll find: ? More in-depth analysis of the four biggest mistakes including volatility calculations, risk/reward relationships, calendar spreads, etc. ? More real world examples with varying scenarios updated to reflect today?s market ? More graphs and tables to better illustrate Kaeppel?s concepts ? More detailed discussion on the nature of options trading and how to create a consistently winning strategy Concise and to-the-point, here?s an action plan you can read and put into place immediately to become a more profitable trader.

Author Biography

Jay Kaeppel is a successful trading strategist for Optionetics, Inc., and has a weekly column titled "Kaeppel's Corner" in which he writes on a variety of trading topics for www.Optionetics.com. Jay has been profiled in Futures magazine, and Barclays Managed Accounts Report, and is author of The Four Biggest Mistakes in Futures Trading, Four Biggest Mistakes in Option Trading, and The Option Trader's Guide to Probability, Volatility and Timing,, all of which have achieved the Top 10 List at www.traderslibrary.com. With 18 years of programming experience, Jay has written a variety of software programs, most notably "Option Pro" trading software, voted "Best Option Trading System" six consecutive years in Technical Analysis of Stocks and Commodities Magazine. As Director of Research for Essex Trading Co., Ltd., he served as a software developer and trading systems designer, and until 2003 he managed futures trading accounts as a CTA, registering seven consecutive profitable years. He earned his Bachelor of Business Administration degree from Western Illinois University in 1981.

Table of Contents

Introduction vii

Mistake #1

Relying Solely on Market Timing to Trade Options 1

Why Traders Make Mistake #1 1

Why Mistake #1 Causes Losses In The Long Run 12

How To Avoid Mistake #1 22

Mistake #2

Buying Only Out-of-The-Money Options 27

Why Traders Make Mistake #2 29

Why Mistake #2 Causes Losses In The Long Run 34

How To Avoid Mistake #2 42

Mistake #3

Using Strategies That Are Too Complex 47

Why Traders Make Mistake #3 48

Why Mistake #3 Causes Losses In The Long Run 55

How To Avoid Mistake #3 64

Mistake #4

Casting Too Wide of a Net 67

Why Traders Make Mistake #4 67

Why Mistake #4 Causes Losses in the Long Run 67

How to Avoid Mistake #4 77

Summary 81

About the Author and Optionetics 83

Company Information 85

Trading Source Guide

Tools For Success in Options Trading 87