Spread Trading

A proven,easy-to-understandmethod for makingmoney with options

"If you've never invested in the stock market,this is the book for you. If you've been investingfor years . . . this is still the book for you. A fantastic introduction to options."
—Jon "DOCTOR J" Najarian, Co-founder, OptionMonster.com

Spread trading-the practice of combining optiontrades and adjusting them over time-is being used successfullyby more and more professional traders. In this book, Greg Jensenshows nonprofessionals the tremendous advantages thissafe and profitable method offers.

In simple and precise terms, Spread Trading providesreaders with all the essential tools to begin trading options.It explains, in nine simple steps, the basics of puts, calls,strike prices, and spreads-assuming no prior knowledge onyour part-and tells how to profit no matter what the market does.The author has helped thousands of people achieve successimplementing this approach, and with Spread Trading, hecontinues to educate individuals on the benefits of trading thisway, showing you how to make money while reducing risk.

Building his lessons around the entertaining story oftwo ordinary guys figuring out how to trade options with each other,Jensen offers more than dry formulas-he relates the sense andthe intuition of trading options in a way that is simple,methodical, and easy to follow.

Acknowledgments.

About the Author.

Introduction.

STEP ONE Understanding the Long and Short of "Call" Options in the Market.

CHAPTER 1 Lon and Shorty.

CHAPTER 2 Let’s Make a Deal.

CHAPTER 3 Trading Rights and Obligations.

CHAPTER 4 Some Key Terms . . . that Almost Make Sense!

CHAPTER 5 Strike One . . . .

CHAPTER 6 Strike Two . . . .

CHAPTER 7 Time Travel.

CHAPTER 8 R&R and Time Travel for Lon.

CHAPTER 9 R&R and Time Travel for Shorty.

CHAPTER 10 How Lon and Shorty Came Out on Their Deal.

STEP TWO Understanding the Long and Short of ‘‘Put’’ Options in the Market.

CHAPTER 11 Bulls, Bears, and Stags.

CHAPTER 12 The Put: Reaching a Different Trade of Rights and Obligations.

CHAPTER 13 Strike One . . . .

CHAPTER 14 Strike Two and Time Travel.

CHAPTER 15 R&R for Lon.

CHAPTER 16 R&R for Shorty.

CHAPTER 17 The Big Picture . . . So Far.

CHAPTER 18 How Lon and Shorty Came Out on Their Deal.

STEP THREE Ramping Up the Possibilities.

CHAPTER 19 Did You Know that There Are a Lot of People Trading Options?

CHAPTER 20 Did You Know You Can Actually Buy and Sell Your Options to Other People ?

CHAPTER 21 Did You Know You Can Vastly Increase Your Return on Investment?

CHAPTER 22 Did You Know that You Never Want to "Make As Much Money As Possible"?

CHAPTER 23 Best of All: Did You Know You Can Combine Option Instruments?

STEP FOUR Getting a Few Basics in Place.

CHAPTER 24 More Time Travel.

CHAPTER 25 What Is an Option Worth?

CHAPTER 26 Strike Three.

CHAPTER 27 Choosing Stocks.

CHAPTER 28 Reading the Tea Leaves (1).

CHAPTER 29 Reading the Tea Leaves (2): Stock Trends.

CHAPTER 30 Getting the Final Pieces in Place.

CHAPTER 31 Fun, Fun, Fun!

STEP FIVE Understanding Two Basic Option Trades.

CHAPTER 32 Insuring Your Investment.

CHAPTER 33 Shorty Heaven: Selling Your Way to Profits.

STEP SIX Moving from Option Trading to Spread Trading.

CHAPTER 34 Trading in Surround Sound: The Fundamental Spread Trade.

CHAPTER 35 The Two Basic Ways to Make Money in Spread Trading.

STEP SEVEN Understanding Bullish Spread Trades.

CHAPTER 36 The Bull Call.

CHAPTER 37 The Bull Put.

CHAPTER 38 Bull vs. Bull.

STEP EIGHT Understanding Bearish Spread Trades.

CHAPTER 39 The Bear Call.

CHAPTER 40 The Bear Put.

CHAPTER 41 Bear vs. Bear.

STEP NINE Getting Started.

CHAPTER 42 Lifting the Fog.

CHAPTER 43 The Launch.

APPENDIX Answers to End-of-Chapter Reviews.

Index.

Greg Jensen is cofounder of Spread Trade Systems, an industry leader in investment education, with students from all corners of the world. Specializing in the techniques of option trading, Spread Trade Systems has developed cutting-edge, innovative educational tools such as weekly Adjust Trade Chat Sessions with STS advisors and MarketWatch Newsletters. A Registered Investment Advisor, Jensen earned his degree in business management, with an emphasis in finance, from Utah State University. Though there are many variations and nuances, the basic concept of option trading is simple-an investor can purchase an option to buy stock without actually buying the stock itself. Then, as the value of the stock rises, the value of the option rises as well. The investor can then sell that option to someone else for a profit without ever having owned the underlying stock. But trying to learn option trading from most experts, says author Greg Jensen, is like trying to learn the tax code from an accountant: they'll toss around big words that you've never heard of, and if you ever actually muster up the courage to ask what a particular term means, they'll explain it to you using other terms you don't understand. In contrast, this engaging book provides the basics of making money with options in a way that anyone can easily learn-even using a little humor to help you along the way.

In nine simple steps, Jensen teaches how you ought to approach the market. It's called spread trading, the safest and best way to make money in the stock market while reducing risk. He uses the story of two regular guys figuring out how to trade options with each other to reveal-in small, logical, bite-size pieces-all you need to know to safely earn remarkable profits in today's market.

Spread Trading begins with the fundamentals, explaining just how put and call options work, before moving on to reveal the secrets of the experts-such as how to combine option instruments to reduce risk and make money regardless of whether the market is trending up or down. The author details, in straightforward terms, the fundamentals of spread trading in short steps, showing you how to get phenomenal results and yet not be ruled by fear or greed along the way.

Most people invest in the stock market hoping that good things will happen-and hoping that bad things won't. With the approach revealed in Spread Trading, you won't have to "hope" that things will turn out well, because you'll actually have control of the situation. By simply managing the spread, you'll be able to make money without fear and actually sleep at night.

A proven,easy-to-understandmethod for makingmoney with options

"If you've never invested in the stock market,this is the book for you. If you've been investingfor years . . . this is still the book for you. A fantastic introduction to options."
—Jon "DOCTOR J" Najarian, Co-founder, OptionMonster.com

Spread trading-the practice of combining optiontrades and adjusting them over time-is being used successfullyby more and more professional traders. In this book, Greg Jensenshows nonprofessionals the tremendous advantages thissafe and profitable method offers.

In simple and precise terms, Spread Trading providesreaders with all the essential tools to begin trading options.It explains, in nine simple steps, the basics of puts, calls,strike prices, and spreads-assuming no prior knowledge onyour part-and tells how to profit no matter what the market does.The author has helped thousands of people achieve successimplementing this approach, and with Spread Trading, hecontinues to educate individuals on the benefits of trading thisway, showing you how to make money while reducing risk.

Building his lessons around the entertaining story oftwo ordinary guys figuring out how to trade options with each other,Jensen offers more than dry formulas-he relates the sense andthe intuition of trading options in a way that is simple,methodical, and easy to follow.