Book Review > The Secret of Writing Options

With the equity market going sideways, the writing of options is one of the few safe and effective ways to generate income for those investors with a blue-chip portfolio or a margin loan drawing capacity. Most texts and experience on this subject come from the U.S.A. Now, an Australian text called 'The Secret of Writing Options', written by Louise Bedford, is available to guide local investors. Louise writes for Shares Magazine, runs seminars and training in share trading and options and has her own web site www.tradingsecrets.com.au.
The book provides detailed guidance on the business of writing covered calls and puts to generate income. Louise takes a conservative approach concentrating on practices to protect the investor from loss. Both writing options on existing stock and undertaking a 'buy and write' are covered in detail. This book is not intended for those wishing to trade options on the options market.
The major topics covered by this 163-page book are:

· the benefits of writing options;
· a detailed explanation of the nature of call and put options;
· the best stocks to use;
· an appreciation of both the buyer's and seller's perspectives;
· an analysis of pricing issues;
· an introduction to candlestick and trend charting;
· strategies to use in writing options;
· taking dividends into account; and
· putting your knowledge into action.

Learning the topic is assisted throughout the book by live examples drawn from the Australian equity market, well-structured chapters, review questions at the end of each chapter and a comprehensive glossary. Throughout the book, pithy trading secrets formatted in boxes summarise the essence of the process and its critical elements.
Written originally in 1999, an update would now be useful. The occasional regression into 'broker speak' or use of technical terms not covered by the glossary could also be corrected.
Overall, I found this text to be an excellent and practical guide to the writing of options and I recommend it for novice and experienced investors alike.