4 comments about Create Your Own Hedge Fund: Increase Profits and Reduce Risks with ETFs and Options (Wiley Trading).

1. This book covers the basics of this strategy very well; however it contains way too much filler information, and not enough substance. The author treats the reader as a novice to the market; but in reality no stock market novice would even begin to understand this strategy - therefore the author misses his target audience!
   
   In my opinion, it is good entry entry-level reading for the market beginner who wants to understand the basics of a hedge fund; however it is not for the seasoned trader demanding greater insight in to a leading-edge strategy.



2. Hedge funds have been in the news lately. Since for the last few years, some have done very well. So it's quite a hot topic. Also true of ETFs, which have proliferated. Wolfinger's title invokes both, in an attempt to attract as large a readership as possible. Alas, the title is somewhat misleading.
   
   The text gives next to nothing about how hedge funds tend to operate. Instead, it is mostly about explaining what ETFs are, and why you might want to own them. One key reason, as furnished by the text, is that you can then write (i.e. sell) covered calls on them. This increases the short term income you can garner from owning an ETF.
   
   Commendably, the author does not recommend buying of options. He says, correctly, that on average, this is a losing game. It is reassuring to read this, for it means that the book is not one of these breathless tales about how to make money quickly.
   
   The explanation of options could have been made 20 years ago. It is fairly limited; meant for a reader with little previous experience in finance. The only truly new material concerns describing ETFs.
   
   The author's strategy is conservative. But in its own way, also limited. To the extent that an efficient market exists for the pricing of the underlying stocks in an ETF, then the covered calls will be priced fairly accurately by Black-Scholes. But if there is an unexpected upside, then your ETF will be sold when the call expires in the money. While if there is an unexpected downside, you retain your ETF and get the call income to reduce your losses. The problem is that if you do this method long enough, you relinquish the unexpected gains. And you end up holding losers.



3. The newest craze in investment publishing involves something about "hedge funds." These mysterious investment vehicles (to the unsophisticated public) are seen as the investment of choice for the "rich" investor looking for outsized market gains, or a reduction in risk.
   
   The author seemed to be taking advantage of this when he titled the book. In actuality, there is nothing more here than a basic (and I do mean basic), primer on Exchange Traded Funds, and basic options trading strategies (covered calls and short puts).
   
   The first few chapters involve wasted pages on Modern Portfolio theory, the advantage of index funds over mutual funds, and the benefits of ETF's over traditional index funds. Anyone who is knowledgable enough to be interested in hedge fund strategies (ie. statistical arbitrage, relative value, market neutral, etc.) will find nothing here that he or she doesn't already know.
   
   The second half on trading options on ETF's is similarly light on any interesting information. Much basic information on covered calls and short puts is covered. It wouldn't be unfair to call it simplistic.
   
   Unfortunately, the author did not discuss the important concept of implied volatility when discussing writing strategies on ETF's. This makes certain option strategies, that normally are equivalent, less than equal when used on an ETF.
   
   The book correctly states short puts are equivalent to covered calls, when the puts are secured by cash. If you are going to buy 500 shares and write 5 calls, it is simpler to just sell 5 puts, and hold cash to back them up.
   
   But the author neglects to mention that options on indexes often trade at what is called an IV skew. Out of the money calls on ETF's are generally underpriced, while the puts are overpriced. This makes short puts backed by cash superior to covered calls on an ETF. But Lord help you if the market gets caught in a huge sell off, or implied volatility increases.
   
   There was no discussion of identifying when it is prudent to sell options and when it is wise to remain unhedged. It didn't address the various follow ups to covered call/short put strategies when the stock moves adversely.
   
   If you know absolutely nothing about ETF's, and options trading strategies, then you might find this useful. If you are looking for information on hedge fund techniques, look elsewhere.



4. The market has always intrigued me. However, following the advice of well meaning, financially secure friends never brought me the success I sought. It turns out that it's much harder to pick winning stocks than I expected. Even the mutual funds I owned were disappointing. "Create Your Own Hedge Fund" really opened my eyes with insight and clear step-by-step guidance in teaching me a profitable, yet safer, way to invest.
   
   The best two skills I gained from this book were: How to build a portfolio and how to make money using one rather simple strategy. This book gave me the necessary confidence to take control of my own finances and provided compelling reasons for doing so. I learned that ETFs (exchange traded funds) are much less expensive to own than what Wolfinger calls 'traditional mutual funds' ...and, on average, make more money.
   
   Wolfinger clearly outlines exactly how to use ETFs and options - a topic that had always scared me. His detailed explanation of how options work convinced me that options are indeed doable. I was also pleasantly surprised to discover that I've been using "options" for years - rain checks at the grocery and auto insurance policies are both essentially options. And the best part - another surprise to me - is that options actually lessen risk. My chances of losing money are now less than they were before.
   
   The author skillfully enables his readers to understand the rationale behind trading decisions with a multitude of examples that make the lessons come to life.
   
   The book also contains useful background information, references and statistics to support the author's ideas. I tried it, and so far, it really works. I make my own decisions now and am happy with the results. Don't be afraid - if I can do it, so can you. As Wolfinger says, I feel like I'm running my own small fund.

4 comments about The Option Trader's Guide to Probability, Volatility and Timing (A Marketplace Book).

1. The author states that he wrote the book for those who are new to options or who have not been successful trading them. Within that context, the book is a pretty good primer.
   
   While the book has some good insights, it is limited in scope and depth.



2. This book is a collection of information that can be read anywhere; so you may as well find an author who explains the information.



3. Straight to and through the basics. I am a rookie option trader. This book spoke to me. I have already saved more than the price of the book, using the information in it. Some of the charts though, did not speak to me. I still don't know what a standard deviation is.



4. this book is one of the best I have read on option trading and I have read probably atleast 50. Very well written, with a great emphasis on timing and volatility.

No comments about Candlepower: Advanced Candlestick Pattern Recognition and Filtering Techniques for Trading Stocks and Futures.

2 comments about The First Crash: Lessons from the South Sea Bubble.

1. The author has done an excellent job of covering the South Sea Bubble of 1711-1721.He demonstrates that a few of the investor -decision makers of the time used technical, analytic financial tools based on the assessment of the riskiness of the asset. However,they did so without any regard to questions of the uncertainty of the knowledge base upon which the expected values were being estimated.His best example is Archibald Hutcheson.Hutcheson used the present value formula approach to calculate the current price of the security based on the discounted present value of the series of expected dividends.Unfortunately,he was not able to incorporate an analysis of the reliability /accuracy of the information base upon which the expected values were being calculated.Hutcheson understood that much of the information was in fact misinformation.The channels for this misinformation were (a) the coffeehouses which the London stock market speculators frequently visited and (b) the newspapers.The ability to assess the knowledge base would have required an understanding of a concept such as Keynes's weight of the evidence,w,developed by Keynes in 1921(1908) in his A Treatise on Probability.Hutcheson was essentially using an earlier version of Benthamite Utilitarianism.Hutchison was able to determine that the valuations were overvalued and that the bubble was being inflated.
   
   The author correctly links his assessment to socalled " modern" developments in behavioral finance theory based on the work of Kahneman and Tversky,Einhorn and Hogarth,Slovic and Lichtenstein,etc.However, the theoretical foundations for the behavioral finance view, Prospect and Cumulative Prospect theory,can already be found completely developed in Keynes's A Treatise on Probability in chapters 3,15,17,20,22,26 and 29.The main conclusion of the KT approach is to establish the use by decision makers of non additive,non linear (non proportional, be it sub additive or super additive) decision weights.Such a technical apparatus was developed completely by Keynes in the TP.
   
   The author also fails to discuss how Adam Smith integrated his study of the Soth Sea Bubble,as well as the Mississippi bubble of 1717-1721 into his discussios of money and banking in his The Wealth of Nations(1776).Smith's careful,detailed analysis of the negative impact of speculation on economic growth lead him directly to his modified usury law and dictum that bankers must be prevented from loaning money to borrowers who are projectors,prodigals and imprudent risk takers.The modern portfolio-Subjective Expected Utility (SEU) approach follows Bentham .Bentham was an avid suppoter of speculation who vehemently opposed Smith on the need for usury laws.Bentham's position on these issues were adopted by Milton Friedman and all Austrian economists,especially F von Hayek,Murray Rothbard,Ayn Rand,and L von Mises.
   I highly recommend the purchase of this book.



2. "The First Crash" by Richard Dale deals with the lessons from the South Sea Bubble of 1720.
   
   According to the dust jacket Dale is Emeritus Professor of International Banking at Southampton University, England. As one might expect, the book contains much technical jargon relating to capital market theory and accounting.
   
   Dale certainly knows his subject and is up to speed with the literature - the bibliography of this 198-page book has 148 entries.
   
   The book might appeal to students or specialists such as bankers, accountants and investment advisors, but it is hard going for the rest of us.
   
   You almost need a financial dictionary by your side and a calculator to follow the intricacies of most of Dale's technical explanations. There is a short Glossary in the book, but it is totally inadequate.
   
   To be fair, it is possible to skip over most of the financial detail and still get a feel for the atmosphere and activities that led to the inflation and deflation of the bubble.
   
   Prior to reading the book I was unaware of the sophistication of financial techniques available in the 18th century. Many of the investment tools in common use today (eg options, discounted cash flow calculations, futures contracts) were available in essentially similar form then.
   
   They were also abused in much the same way (and by people of similar character) as they were in all subsequent bubbles. Human nature never changes, and the possibility of large gain attracts the greedy, the credulous and the scoundrel.
   
   Chapter 9 contains a technical and rather pedantic discussion of the lessons from the bubble that will be of interest to specialists, but probably not to most general readers.
   
   If you have the skills and want to pore over the financial technicalities of the South Sea Bubble you will enjoy the book and you will benefit from Dale's impressive knowledge.
   
   If you just want to know what happened and why it happened, there are more suitable and accessible accounts than this book.

5 comments about The Conservative Investor's Guide to Trading Options (A Marketplace Book).

1. Assumes you know nothing and does an exemplary job explaining the fundamentals and foundational strategies you'll want to know trading options, like strike price selection, covered calls, puts as insurance, straddle writing, and much more. This book is truly well written in how it teaches first through theory and then through fully explained examples, breaking down calculations in clear steps. The best thing about his book is that it offers the reasoning behind different choices available to you. Once you grasp that, you have the foundational understanding to cater the theories to come up with your own personalized versions of the strategies. Only four stars for some typos that may confuse you if you're not reading carefully, like an example to buy puts instead of to sell puts and another table with some errors in sale proceeds and pretax pre-commission profits -- sloppy editing (mistakes are easily noticeable if you follow along with the calculations). My first exposure to options was through reading Saliba's Options Workbook, which is put to shame by Gross' book in terms of explaining the basics. I recommend Gross' book as a starting point for anyone interested in options. From there, move on to Fontanills' Options Course.



2. This is one of the better texts on conservative options strategies. It's the only book I've read that discusses the time and record keeping requirements needed to implement options strategies. This is particularly relevent to those interested in covered call writing.
   
   Some specific recommendations in the text have been made obsolete since the emergence of online ($8 commission) trading. This has greatly increased the profit potential of shorter term positions in covered call writing. In past times, longer holding periods, and rolling of options was needed to overcome the effects of high commission prices. Now, shorter holding periods, even on in the money positions, usually yields higher profitability; contrary to the advice in the book.
   
   This is still a very good text, and well worth reading.



3. This book does a good job of identifying the less risky types of option trades an individual investor would want to do. It goes through the various strategies with mathematical examples in a common sense approach. It does not, however, go into the theory of options which I think is necessary to use them effectively and to assure their pricing is reasonable. Larry McMillan on Options is an excellent in-depth book on option theory.



4. Before reading this, or any, options book, one should go to [website] and study the subject thoroughly. Once you know the basics, this book can be appreciated. Note: unless one has at least about $5000, someone should quite probably stick to buying calls or puts (which the author, the late Mr. Gross rightfully labels as an 'aggressive' strategy), depending on the market's and a stock's overall outlook.
   This book is at its best when used by someone with more than $5000 (and preferably more like $10,000) who can use the time-tested hedging strategies effectively detailed here. Investors on a tighter budget would likely do better with Charles Caes'"Tools of the Bull" or "Tools of the Bear" (the "Bear" book can be easily adapted to using in a bull market also). Options investors should also know some technical analysis, John Murphy's "Charting Made Easy" is a good, cost-effective source.
   The layout of this book is clean and makes it easy to read. Gross was a good writer, relaying his ideas clearly to the reader. Any options book will confuse a beginner, learn them first at [website].



5. Most trading books give you well chosen examples of how great their methods work. Rarely the risk and downside. This one shows you the strategies, and the risks if it all goes wrong, as well as the potential profits. It walks you through clear examples and describes over a dozen strategies in a simple manner. Some I surprisingly wasn't familiar with. For example, this is one of the few option texts that mentions and walks though calendar spreads.

   If you can't understand this book, you shouldn't be trading options. It is one of only 4 option texts I have kept in my library. The only criticism I have is that this book was written before discount brokers, the commissions weren't updated in the examples. You should not be without this one. Larry McMillan wouldn't be involved if it wasn't first class.

   Another good one is Trester's "The Complete Option Player".

No comments about Winning with Options: The Smart Way to Manage Portfolio Risk and Maximize Profit.

5 comments about Sniper Trading: Essential Short-Term Money-Making Secrets for Trading Stocks, Options and Futures.

1. An old friend of mine asked me to read this book for him that was a gift years ago. I have been trading for over 5 years. I gave it a spin. UGGGHHHH!!!! What garbage!!!!!!
   
   If this book ever was legit or had any validity, it was long before the volatile markets of today. Overall, the methods described in this book are to be met with extreme caution. If you are actually foolish enough to attempt them, you had better paper trade them for at least a year before risking your own money. I paper traded them and I had less than 10% winners. Yes, 90% of my tested trades failed.
   
   There are better, more current options for you. SKIP THIS!!!



2. I have read and studied many trading methods over 10 years. I am curious about this author so bought a few books from him to read. It's a waste of time and money. Totally agree with those who voted 1 star for this author. Trading today is not so easy and too general as this author described in his books. So, newcomers be aware!



3. I find the book enlightening. It can be a bit repetitive, and some of the information is not that well organized. However, the content is there. Some of the pages have very concentrated content, you have to read them several times because there are so many concepts presented. Apparently the pay-by-mail LSS system he sold was marketed somewhat dishonestly, but that doesn't mean he's not an excellent trader. I find this book helpful in identifying mistakes and broadening my understanding. It is worth noting the book focuses primarily on futures trading in its examples, however the concepts apply to trading in general. This book is definitely not a waist of paper as some of these reviews seem to imply. I purchased this book after reading in it in a bookstore, if you doubt its content read in it first. Just my thoughts.



4. 1. There is obviously a credibility issue with Angell getting nailed for telling half truth in marketing the LSS system in the late 90s. The book is not entirely about the LSS system though. I always take the cautious track when someone try to sell me a profitable system.

   2. I agree with the other reviewers on the contents. The book is rather unorganized(in many chapters) and there is a lot of cliche repeating through the book. Yes, market wizards are better read if you want something along that line.

   3. Many of the claims were not backed up with tested results. If that doesn't raise your suspicion, I can sell you the Brooklyn bridge at a pretty good price.

   4. There are the momentum forumulas one reader suggested. Yes, play with them and learn anything you can before risking any real cash. I am not certain it offers more insight than other existing indicators but I keep my mind open on that one.

   5. As to the simplicity of a two legged move, yes, I laughed when I first read it. However, you shouldn't take something for granted just because it is simple (Many successful traders use simple system which they have lots of insights on). The key in this matter is how well that two legged breast work in action which the book didn't offer any solid evidence.

   And some of his rules are leaning towards the discretionary side which makes the system less repeatable and objective.




5. This book is one of the top ten books on trading & investing that I've ever read. Mr. Angell has given the retail trader a real gift in terms of being able analyze the market based on price action (which is the final arbiter of value). If you work with the methodologies and formulas in the book, lay them out in a spreadsheet, track the market by its Oscillation in combination with increasing or decreasing Momentum while keeping an eye on the 5 and 1 day Strength measurements and initiating trades in the buy envelope, sell envelope or at the pivot point (long or short based on market momentum) there is a very high proability that you will learn to trade extremely well. This of course, will lead to making a substantial amount of money.

   I recommend purchasing this book and the workbook, setting up your spreadsheet formulas and tracking your commodit(ies) for a period of a month via paper trading while you figure it out - You MUST keep good records and track the information in a spreadsheet so that you can create a good historical understanding of the market's price action in relation to the differnt value measurements. (I'm using it with the E-Minis, but I'm sure it will work for any commodity).

   Note: (It took me a total of about 6 months of sitting in front of my screens and analyzing the market movement to put it all together-so, there is a learning curve, but believe me, it was worth it).

   Good Trading and Good Luck!

2 comments about Understanding Hedged Scale Trading.

1. The title of this book is misleading. Only one chapter in the entire book deals with hedged scale trading and to sum it up the author says..."buy puts". Brilliant. The rest of the book describes scale trading (poorly) and fundamental analysis. If you want to learn about scale trading go to the source. Look at Robert Weist's, "You Can't Loose Trading Commodities". Weist does a much better job describing this trading technique. This book was a real disappointment and waste of money (in my opinion).



2. Mr. McCaffery writes with clarity and leads the reader surely towards a grasp of this somewhat arcane futures trading strategy. Scale trading with options means : buying (or shorting) a hedged commodity with the expectation that the price will revert to its mean within a certain period of time.

   Specifically, you buy a commodity (sugar, soybeans, oil, etc.) that's trading toward its historic lows. You purchase put options to put a floor under the trade (limiting your risk), and scale into the trade (buy more futures at pre-determined intervals) if the price continues to fall. You are relying on the near certainty that the price must eventually rise. If you hold long enough and if all goes as it should (i.e., you execute), you will make a boatload of money in the eventuality. Obviously, attempting to scale trade a stock, which may have no tangible worth (think "Enron") is a bad idea, hence the focus on commodities futures.

   "Understanding Hedged Scale Trading" offers a relatively user-friendly technique for playing in the pits. After explaining how the futures markets work, the author gets right down to the real nitty-gritty: deciding which commodities to trade, the mechanics of trading futures, and how to buy more time (roll over your position). There is even a short treatise on technical analysis.

   According to the publisher (and my Amazon search), this is the only comprehensive book on hedged scale trading currently available. Good thing that it's a keeper.

1 comments about Sniper Trading Workbook: Step-by-Step Exercises to Help You Master Sniper Trading.

1. Being a colllege professor for more than 3 decades, I have read too many books on money, market, investing , and trading. I found
   George Angell's book one of the best. It tells as it is and reveals not only the in-and-out, the up-and-down of trading the market but also the philosophy of life, the psychology of trading, and the attitude of winning the games. I recommend this book to anyone who has interest in shot-term trading.
   The Professor

4 comments about The Insider's Automatic Options Strategy: How to Win on Better Than 9 out of 10 Trades with Extremely Low Risk.

1. I purchased this book in the mid 1990s, and began trading commodities options with a small account (because I did not have enought capital to meet the margin requirements for trading the stock indexes). I traded crude oil short spreads exclusively, and made money consistently for several months. However, I ignored the money management rules to my peril. I did not close out positions that were in the money at expiration, thinking that I would simply buy the contracts to cover the options that were exercised. WRONG!!! The market went limit up for several days, and when I was finally able to get out, I had given back 10 months worth of profits. I was so shaken by the experience that I stopped trading for a long time. Although I agree with another reviewer that the text can be confusing, and Dr. Schiller does erroneously mix his terms, the underlying statistical model appears valid. I paper-traded the system based on historical and real-time data before committing money to it, and I actually used it profitably for some time. I would consider the book a useful addition to a trader's library, subject to the caveats mentioned.



2. A friend insisted he'd learned by reading this book how to safely and consistently generate sizeable sums of money by selling puts using the market indexes. In fact, he said I was stupid if I didn't do the same. That was when the S&P 500 was above 1000. Now he no longer wants to talk the market and registers only pain when I broach the subject. Even without reading the book, I have to question whether the title isn't misleading. Is it really insider's information? Is it really automatic? And is it really "extremely low risk'? (Unlike my friend, the author at least stops short of calling it "no risk.")



3. Which is worse, a NYC taxi driver (Wade Cook) giving oversimplified financial advise, or a PhD computer programmer writing on investments? The common denominator is that both present and overemphasize the "sure thing" concept.

   Mr Schiller demonstrates why people with PhD in computer science should not write a book on investment. The intro itself is misleading with "no risk, short spread,protected straddle" in bold print in the same paragraph. Three shortcomings 1) terminology is absolutely WRONG; 2) understanding of "assignment" GROSSLY FLAWED; and 3) ignores margin requirements where some examples are not possible on a $50,000 account.

   TERMINOLOGY: What he describes as a "short spread" is actually a short (or naked) straddle - selling a call above the market and a put below the market. By industry standard definition, a "spread" is selling AND buying a call (or put) on the same security at a different strike price. Ironically, what he describes as a "protected straddle" is actually 2 spreads - a call spread and a put spread straddling the market price. He then goes on to explain more complex positions while intermixing spread and straddle terminology.

   ASSIGNMENT: On page 47, he notes that the LONG option in a protected straddle or butterfly spread are "in the money (by design) and subject to involuntary early assignment." He ignores the fact that the LONG position is further out than the SHORT position to create the net credit that he advocates. More important, long options are NEVER assigned, only short options are. Long options are EXERCISED at the instruction on the holder which starts the assignment process.

   MARGIN. Too complex for this review, but totally ignored in the book. Some firms, like Schwab, have $50,000 min equity requirement for naked options on broad based indexes (like the OEX) That is net remaining after the higher of 3 other rules. His $50,000 account wouldn't support 1 contract, much less the total of 17 contracts on page 82. You can't trade yourself into a maintenance call!!!!

   READER BEWARE!




4. Not just theory and abstract ideas, this book states a specific trading plan that I have followed and profited from. The book compares 4 or 5 ideas to compare, but then tells the reader, this is the one to follow. It involves the selling (writing) of far out of the money OEX index options, short term. Performed as the author states, it is a consistant winner with controlled downside risk. Less than 200 pages and easy to read