The Complete Guide to

OPTION

SELLING

How Selling Options Can Lead to Stellar

Returns in Bull and Bear Markets

Third Edition

JAMES CORDIER AND

MICHAEL GROSS

Mc
Graw
Hill
Education

New York Chicago San Francisco Lisbon

London Madrid Mexico City Milan New Delhi
San Juan Seoul Singapore Sydney Toronto
 CONTENTS

Acknowledgements

Introduction

Part I: Selling Options: Why and How it Works

1. The Option Seilers Secret: Excelling in the Worlds Most
Underrated (and Undiscovered) Investment Strategy
2. The "Who" of Selling Options: Insights From 30 Years
in the Options Market
3. Why Aren t You Selling Options? The Key Advantages
of Option Selling
4. Buying Options Versus Selling Options: Who Wins?
5. Option Selling on Steroids: An Introduction
to Futures Options
6. SPAN Margin: Your Key to High Returns

Part II: Option Selling Strategy and Risk Control

7. How to Pick the Right Option to Seil: Lessens Learned
from Three Decades in the Field
8. The Use and Abuse of Spreads: How to Keep Them
from Taking Your Money
9. Recommended Spreads: The Few and the Proud:
Spread Strategies That Really Work for the Individual Investor
iv * Contents

10. The Best Option-Selling Strategy Ever:

The Ratio Credit Spread 159
11. Option-Selling Mechanics: Quick Tips on Liquidity, Timing,
Order Placement, Assignment, Limit Moves, and More 169
12. Managing Your Option-Selling Risk: Defense Wins
Championships 181

Part III: Market Analysis and Option Selling 203

13. Fundamentals: The Dirty Little Secret About how Money
Really Gets Made in Commodities 205
14. Key Fundamentals of Select Markets:
What to Watch, Where to Find Them 223
15. Seasonal Tendencies in Option Selling:
A Most Potent Profit Formula 243
16. The Best Markets for Seasonal Option Sales: A Primer
for Seasonal Neophytes 261
17. Volatility Simplified: All You Need to Know About the Most
Misunderstood Option Component 287
18. How to Structure Your Option-Selling Portfolio: Tips
on Building Your Premium Ladder 297

Part IV: Getting Started 307

19. How to Avoid the Mistakes New Option Seilers Make: Learn
Them Here and Save Yourself Time, Money, and Headaches 309
20. Finding a Good Broker or Money Manager: The Best Trading
Decision You'll Ever Make is Choosing the Right Professional 319
21. Option Selling as an Investment: Frequently Asked Questions 331
22. -Pulling It All Together: A Quick Review of What You
Have Learned 343
References and Resources 351
Index 355
About the Authors 362