Smart Option Trading Strategy Guide You own a call option and it's more than doubled in value. Do you know at least four ways to handle this trade? (Hint: one gives you a chance to make a lot more money while reducing or eliminating risk.) Do you know the alternative to Covered Calls that reduces risk and increases return? SMART OPTION TRADING details eight strategies that serious options investors should know and the secrets of trading them. Strategies include… Call Buying Protective Put Covered Call Bull Call Spread Bear Put Spread Bull Credit Spread Bear Credit Spread Calendar Spread This strategy guide takes complicated concepts and presents them in easy-to-understand language. Details on each strategy include… How do I make money with it? What is it? How much can I make? How much can I lose? How much does it really cost? What is the breakeven? What should I consider when picking one of these spreads? What do I say to my broker to place an order? Now that I've got one, how do I manage the trade? Which similar strategies should I consider? SMART OPTION TRADING also includes . . .Glossary of Important Option Terms and a Handy List of Valuable Option Resources Gregg R. Murray, the author, is a retired money manager who specializes in options strategies and trading. He is chair of the Options Special Interest Group of one of the largest investor education groups in the nation. For more information: http://cgi.ebay.com/aw-cgi/eBayISAPI.dll?ViewItem&item=504531532 Good investing, Gregg Murray Gregg Murray Company 2685 California Street San Francisco, California 94115 Author of: No-Hype Options: Introducing Options to Smart Investors No-Hype Strategies: Spread Strategies for Smart Option Investors Better Options: A High-Performance Alternative to Covered Calls Smart Option Trading The Dow Buster System http://www.GMurrayCo.com

OK, Gregg.  I'm game.  Four ways to handle a call that has doubled in value: 1.  Best Way:  Close it and use the proceeds to buy more calls.  Nothing wrong with taking a 100% profit, eh? 2.  If there's still time on it and it's still trending, sell an OTM call against it, turning it into a bull call spread, thus lowering your breakeven, taking away some risk if the stock retraces, and giving it some more room to move up. 3.  If there's a lot of time on it and it's still trending, sell an OTM call on it and use the premium to by an ATM put. 4.  In addition to #3, sell an OTM put. Alternative to Covered Calls: 1. A collar:  For each 100 shares of stock, sell a 10-20% OTM Leap call, and buy an ATM or slightly ITM Leap put with the proceeds.  It totally protects your downside while giving the stock some room to rally. 2. A ratio backspread hedge.  Sell an ATM or ITM put and buy 2 OTM puts for a credit.  Makes money both ways, as long as the stock doesn't fall into the gap between the strikes.  Can be done with calls, too, of course for less downside protection but more bang for the buck on the upside. 3.  Calendar spread hedge.  Sell an ATM front month put and buy a back month put at the same strike.  You can roll out the sold put and do a diagonal spread, or just let the long put appreciate, depending on the move in the stock.  If the stock takes off, get on board by buying back the sold put and selling another one ITM for a bull put spread. Hope this doesn't eat into your book profits, Gregg  Actually, I wouldn't mind reading it myself.  There are always things to learn and you've been a patient and generous participant in the group. Bruce F. Gregg Murray < This e-mail address is being protected from spam bots, you need JavaScript enabled to view it wrote in message : Smart Option Trading Strategy Guide : : You own a call option and it's more than doubled in value. Do you know : at least four ways to handle this trade? (Hint: one gives you a chance : to make a lot more money while reducing or eliminating risk.) : : Do you know the alternative to Covered Calls that reduces risk and : increases return? : : : SMART OPTION TRADING details eight strategies that serious options : investors should know and the secrets of trading them. Strategies : include… : : Call Buying : Protective Put : Covered Call : Bull Call Spread : Bear Put Spread : Bull Credit Spread : Bear Credit Spread : Calendar Spread : : This strategy guide takes complicated concepts and presents them in : easy-to-understand language. Details on each strategy include… : : How do I make money with it? : What is it? : How much can I make? How much can I lose? : How much does it really cost? : What is the breakeven? : What should I consider when picking one of these spreads? : What do I say to my broker to place an order? : Now that I've got one, how do I manage the trade? : Which similar strategies should I consider? : : SMART OPTION TRADING also includes . . .Glossary of Important Option : Terms and a Handy List of Valuable Option Resources : : : Gregg R. Murray, the author, is a retired money manager who specializes : in options strategies and trading. He is chair of the Options Special : Interest Group of one of the largest investor education groups in the : nation. : : For more information: : http://cgi.ebay.com/aw-cgi/eBayISAPI.dll?ViewItem&item=504531532 : : Good investing, : Gregg Murray : Gregg Murray Company : 2685 California Street : San Francisco, California 94115 : : Author of: : No-Hype Options: Introducing Options to Smart Investors : No-Hype Strategies: Spread Strategies for Smart Option Investors : Better Options: A High-Performance Alternative to Covered Calls : Smart Option Trading : The Dow Buster System : http://www.GMurrayCo.com : : :

Hope this doesn't eat into your book profits, Gregg  Actually, I wouldn't mind reading it myself.  There are always things to learn and you've been a patient and generous participant in the group. Happy Thanksgiving, Gregg Murray

: : OK, Gregg.  I'm game.  Four ways to handle a call that has doubled in value: : : 1.  Best Way:  Close it and use the proceeds to buy more calls.  Nothing wrong with taking a 100% profit, eh? : 2.  If there's still time on it and it's still trending, sell an OTM call against it, turning it into a bull call spread, thus lowering your breakeven, taking away some risk if the stock retraces, and giving it some more room to move up. : 3.  If there's a lot of time on it and it's still trending, sell an OTM call on it and use the premium to by an ATM put. : 4.  In addition to #3, sell an OTM put. : : : Those are nice strategies, but way too complicated for me. The strategy in Smart Options Trading and Better Options is much easier. : : Alternative to Covered Calls: : 1. A collar:  For each 100 shares of stock, sell a 10-20% OTM Leap call, and buy an ATM or slightly ITM Leap put with the proceeds.  It totally protects your downside while giving the stock some room to rally. : 2. A ratio backspread hedge.  Sell an ATM or ITM put and buy 2 OTM puts for a credit.  Makes money both ways, as long as the stock doesn't fall into the gap between the strikes.  Can be done with calls, too, of course for less downside protection but more bang for the buck on the upside. : 3.  Calendar spread hedge.  Sell an ATM front month put and buy a back month put at the same strike.  You can roll out the sold put and do a diagonal spread, or just let the long put appreciate, depending on the move in the stock.  If the stock takes off, get on board by buying back the sold put and selling another one ITM for a bull put spread. : : Thanks for your kind comments, and I don't think your note hurt at all. : : : Hope this doesn't eat into your book profits, Gregg  Actually, I wouldn't mind reading it myself.  There are always things to learn and you've been a patient and generous participant in the group. : : Happy Thanksgiving, : Gregg Murray : :

: : Ahhh!  Simple you want.  Okay, I think I may be getting warmer:  Simply use the money to buy another call, thus creating even more leverage than you had by buying the first option.  Some traders pyramid into systems plays:  Start by buying, say, $500 worth of calls.  If/when you double it, buy $1000 worth of calls for the next cycle, etc., etc.  You set tight stops so that you don't pyramid backwards, and just keep going.  Never works for me, somehow, but it could. : : Bruce :