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The Four Biggest Mistakes in Option Trading Trade Secrets Ser
August 31, 2009 by Investment Secrets · Leave a Comment
The Four Biggest Mistakes in Option Trading Trade Secrets Ser

You are viewing the first edition. This title is now available in an updated 2nd Edition Kaeppel beams a very bright light on 4 of the most common yet most difficult to overcome trading `dont’s’. In easy-to-understand terms he breaks down the problems and offers solutions. Keep this concise little gem near you at all times while trading. You can earn big profits in options trading by avoiding the 4 most common and most costly mistakes the majority of traders make. System and software developer Jay Kaeppel shows you how to avoid common pitfalls option traders encounter that cause them to lose money in the long run.
In Kaeppel’s quick reading style you’ll . . .
> Learn to isolate the 4 most common mistakes
> See why they are so common and easy to make
> And discover a simple strategy to avoid these mistakes altogether
Concise and to-the-point here’s an action plan you can read and put into place immediately to become a more profitable trader in no time.
User Ratings and Reviews
1 Star beware, buyer
This is the first review I ever share on Amazon. I tend to keep my thoughts to myself, but this book is more a pamphlet that leads to their service advertisements. I think someone must bring this “scam” to light. (Please check the number of pages in this “book”, then divide by 4 to get the equivalent pages of a book)
The 4 items that this book covers are common sense that any experienced investor and intermediate trader would have developed in the first 3 years at the respective area.
Use the cost of this book and buy a deep out of money contract. It will be more profitable.
5 Stars The Four Biggest Mistakes in Option Trading
Well written and concise. Very very importan for ALL Option traders to own and keep in their library. If anyone understands a little bit about “Implied Volatility”, this book is a must!
1 Star what a Joke
by far a worthless book on options,
the cover looks great, but this has no
value; I learned more on the optionsxpress
website than this book, anyone who has
read an options book would not
appreciate this book it assumes you
know nothing about options and really
tricks you into thinking that the author
knows what he is talking about.
5 Stars Short and sweet but too theoretical
This book is useful in directing novice options traders to the four biggest mistakes usually made in this area. The book does what is says with describing the theory behind the authors arguments but unfortunaly does not provide market examples on how that should be implemented in real life. Having read other books by this author, I am sure he is capable of supplementing his theory with examples . One of the mistakes he mentions is buying only out of the money options and he recommends buying in the money options. Unfortunately he does not address the fact that this approach could still result in a total loss if the option ends out of the money by expiration day. In addition to be successful in trading in the money options your timing needs to be accurate enough to be certain you do not face a total loss. Timing is never addressed in this book and you would need to supplement this by other books that focus more on this area.
Why 5 stars? Even with these shotcomings it is important that beginners know where they can go wrong and then focus on what to do right.
5 Stars Excellent book that delivers exactly what its title says
There are four basic mistakes all beginning option traders make, these are:
1) Relying solely on market timing;
2) Buying only out-of-the-money options;
3) Using strategies that are too complex; and
4) Casting too wide a net on option choices
Relying solely on market timing.
It causes failure because it ignores implied volatility. It can lead to paying far too much to purchase an option. It would be like buying a stock without knowing its P/E, or buying a car without knowing its blue book value. The way to avoid this mistake is by carefully analyzing which options are best suited to achieve your objective. Also, measure what is the current implied volatility of these options and compare it vs. the historical volatility of this option. This will give you an idea of the current valuation of this option, and whether it appears overpriced or underpriced.
Buying only out-of-the-money options.
By doing so, you ignore the probability that the option will eventually be in-the-money. It leads to buying options with little likelihood of profiting. You can get lucky once. But, such a blind strategy is a sure way to get wiped out in option trading. Instead, you should know exactly what is the probability of you making money on each option trades. This entails knowing the “Delta” of a specific option. If an option has a Delta of 20. It has a 20% chance of being in-the-money.
Using strategies that are too complex.
This leads to unfavorable risk\reward situations. First, you should determine your objective and make certain the trade you are going to make can achieve those objectives without more risk than you can handle.
Casting too wide a net.
You will spend too much time wasted looking for opportunities among illiquid options. By doing so, you will waste a lot of your potential returns on the wider bid and ask spreads of these less than liquid options. Instead, focus on securities that have actively traded options.
This book is a real eye opener on option trading.
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