Guy Cohen - Options Made Easy: Your Guide to Profitable Trading

ePUB is an open, industry-standard format for eBooks. However, support of ePUB and its many features varies across reading devices and applications. Use your device or app settings to customize the presentation to your liking. Settings that you can customize often include font, font size, single or double column, landscape or portrait mode, and figures that you can click or tap to enlarge. For additional information about the settings and features on your reading device or app, visit the device manufacturers Web site.

Many titles include programming code or configuration examples. To optimize the presentation of these elements, view the eBook in single-column, landscape mode and adjust the font size to the smallest setting. In addition to presenting code and configurations in the reflowable text format, we have included images of the code that mimic the presentation found in the print book; therefore, where the reflowable format may compromise the presentation of the code listing, you will see a Click here to view code image link. Click the link to view the print-fidelity code image. To return to the previous page viewed, click the Back button on your device or app.

Third Edition

Your Guide to Profitable Trading

Guy Cohen

Vice President, Publisher: Tim Moore
Associate Publisher and Director of Marketing: Amy Neidlinger
Executive Editor: Jim Boyd
Editorial Assistant: Pamela Boland
Operations Specialist: Jodi Kemper
Marketing Manager: Lisa Loftus
Cover Designer: Chuti Prasertsith
Managing Editor: Kristy Hart
Project Editor: Betsy Gratner
Copy Editor: Deadline Driven Publishing
Proofreader: Gill Editorial Services
Indexer: Lisa Stumpf
Compositor: Nonie Ratcliff
Manufacturing Buyer: Dan Uhrig

2013 by Guy Cohen
Published by Pearson Education, Inc.
Publishing as FT Press
Upper Saddle River, New Jersey 07458

This book is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services or advice by publishing this book. Each individual situation is unique. Thus, if legal or financial advice or other expert assistance is required in a specific situation, the services of a competent professional should be sought to ensure that the situation has been evaluated carefully and appropriately. The author and the publisher disclaim any liability, loss, or risk resulting directly or indirectly, from the use or application of any of the contents of this book.

FT Press offers excellent discounts on this book when ordered in quantity for bulk purchases or special sales. For more information, please contact U.S. Corporate and Government Sales, 1-800-382-3419, .

Company and product names mentioned herein are the trademarks or registered trademarks of their respective owners.

All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher.

Printed in the United States of America

First Printing April 2013

ISBN-10: 0-13-308789-1
ISBN-13: 978-0-13-308789-5

Pearson Education LTD.
Pearson Education Australia PTY, Limited.
Pearson Education Singapore, Pte. Ltd.
Pearson Education Asia, Ltd.
Pearson Education Canada, Ltd.
Pearson Educacin de Mexico, S.A. de C.V.
Pearson EducationJapan
Pearson Education Malaysia, Pte. Ltd.

Library of Congress Cataloging-in-Publication Data

Cohen, Guy.
Options made easy : your guide to profitable trading / Guy Cohen. Third edition.
pages cm
Includes bibliographical references.
ISBN 978-0-13-308789-5 (hardcover : alk. paper)
1. Options (Finance) 2. Speculation. I. Title.
HG6024.A3C643 2013
332.64'53--dc23
2012050944

This is one of the best books on option strategies I have ever read.

Daniel J. Zanger, President, Chartpattern.com

Guy Cohen builds a foundation for the reader with simple definitions and clear mechanics on what can be a complicated topic. He then approaches each strategy with a context of fundamental and technical analysis and sets the stage for a solid understanding of risk, reward, and probability.

Dave Whitmore, Senior Strategist, Investor Education, E*Trade Financial

Guy Cohen really does make options easy. Each options strategy has both a visual diagram of the risk and reward, as well as a logical explanation of how the strategy works. Combined with primers on fundamental and technical analysis, Guy shows you how to put the odds in your favor in todays options markets.

Price Headley, Founder of BigTrends.com and author of Big Trends in Trading

Guy Cohen has put together a comprehensive, easy to understand, must-read on options for investors of all levels. Practical in its approach, the graphics bring clarity to what beginning investors might consider complicated strategies.

Joseph Sellitto, CEO, Global Execution Brokers

The best book on options I have ever come across.

Alpesh B. Patel, bestselling author of Trading Online and Mind of a Trader

Guy Cohen cuts through the fog and helps all levels of investors grasp the most intricate concepts. He does so with great clarity and brevity despite covering such a broad set of topics. His is an invaluable guide for the interested beginner and the most advanced trader.

Ned Bennett, former CEO, optionsXpress, Inc.

In memory of Geoffrey Glassborow, who cured me from what was supposed to be incurable.

Its amazing how many parts of your mind go into writing a book like this. As a result, there are a number of people I must thank for both their direct and indirect influence.

First to my friend, the late Geoffrey Glassborow, to whom this book is dedicated and whose amazing skills enabled me to prove modern medicine wrong. In 1994, I was diagnosed with ulcerative colitis, an intensely debilitating condition of the lower intestine. The condition was serious enough to lead doctors in both the UK and the U.S. to recommend surgery as the only means of relief. At this time, I was in constant pain and fear, such that even venturing out of my home became an achievement in itself. Through Geoffrey, I made a full recovery and also learned how to think.

I also need to thank my MBA finance options lecturer from City University (Cass) Business School, Professor Gordon Gemmill. It was his enthusiasm that got me hooked in the first place.

Alpesh Patel, thank you for introducing me to the Financial Times and Pearson. Finally, to Dominic and Lulu, who are more family than family.

---

The publisher is grateful for permission to use charts created on OVI Charts, Worden Brothers TC2005, and TradeStation, the flagship product of TradeStation Technologies Inc. (http://www.tradestation.com).

About the Author

An innovator in financial trading, Guy Cohen is the creator and originator of the unique OVI Indicator, FlagTrader, and OptionEasy. He is the author of best-selling trading books Options Made Easy, The Bible of Options Strategies, and Volatile Markets Made Easy (FT Prentice Hall). Guys new book, The Insider Edge (Wiley), was released in September 2012 and is focused on his OVI Indicator. His published work is complemented by pioneering breakthroughs in the areas of trading and technical indicators, specifically the OVI.