Rookie’s Guide to Options and Twitter. Suggestions Welcome

I'm working on updating The Rookie's Guide to Options and will include some material on the debacle of 2008.  I know many of you have read the book, and I'm looking for suggestions on how it can be improved.

It's not a complete re-write, but if you have any ideas for sections that require clarification or expansion, please let me know.  I don't know how the editor will feel about adding new chapters (I plan to add one), but all ideas are welcome.


While I'm taking suggestions, I'd like to know what sort of commentary you'd like to see on Twitter.  I don't make too many comments, but if there's a topic that you want to see mentioned, please let me know via comment.  Warning:  You don't want to hear my predictions for stock market direction.  I prefer to trade with no market bias.


8 Responses to Rookie’s Guide to Options and Twitter. Suggestions Welcome

  1. duane slyder 01/23/2009 at 11:04 PM #

    I like what you have on twitter right now. Your thoughts and changes on your ICs are much appreciated. I’m thinking about how to use twitter myself now.
    I’m shocked, shocked! that you are into Apr already. I (precollapse) would be opening aprils 10 weeks til expiry, but now I’m opening 8 to 6 weeks out. Too much volatility right now. Less profit but less risk when holding for only 6 to 4 weeks.

  2. Mark Wolfinger 01/24/2009 at 11:24 AM #

    I thought the jump in IV (I traded these iron condors when IV, that’s RVX, rose to a level of 58-60) was one reason to trade April options. It’s one way to sell a bit extra vega.
    But, it also allows me to sell options that are further OTM. It’s always a trade-off between being further OTM and having less time to expiration. We must each find our own comfort zones and manage risk in a manner that suits us.
    My current preference is to sell options with 3 or 4 months remaining and try to close with about 3 weeks remaining. Right now I’ve closed most of my February (all the calls and some puts) and have begun to buy in my Mar spreads – hopefully not the ones you are opening!.

  3. Micah 01/25/2009 at 1:39 PM #

    I just finished reading your book. I think you need to go into further detail on the diagonals. I’m going to place a trade in a virtual account and see what it does.

  4. Mark Wolfinger 01/25/2009 at 3:00 PM #

    I’m updating the book at the moment and will make a careful review of this chapter.
    Keep in mind that diagonal spreads can work beautifully, but there is some risk that implied volatility will fall, hurting the position.
    Thanks for posting.

  5. rluser 02/02/2009 at 11:25 AM #

    I second the idea of expansion on diagonals. I also think there is another area that could use expansion.
    When you discuss covered calls and collars, you indicate that ATM is a most conservative stance (as you obtain more up-front protection). After explaining the equivalence, you shift to credit spreads (and two winged spreads), but you prefer to be more OTM without clearly articulating what drives you to make this strike shift.
    Thanks for your writings.

  6. Mark Wolfinger 02/02/2009 at 11:43 AM #

    Good point.
    I look at covered call writing as an income-generating strategy, but one that should come with some reasonable protection against loss. Hence writing OTM options doesn’t fit the bill.
    When selling credit spreads, the goal is to profit. The investor wants to find a good compromise between a high probability of success limited losses.
    In the book I do discuss how an investor chooses between OTM options and CTM (closer to the money) options. For the right investor, it may pay to write ATM options in an attempt to earn a large profit. But most prefer having a better chance of making money and opt for OTMs. It’s another one of thsoe comfort zone decisions.
    I’ll see what I can do to clarify.
    Thanks for input.

  7. I’ve read your postings at the Fool which led me to read your website which led me to buy your book which I’ve found very helpful. One suggestion for improvement is to display on P/L graphs the different choices a trader has to make. For example, when choosing the spread between the short call and short put of an IC, a wider spread correlates to a longer body on the P/L graph but has a lower profit potential. You could overlay a graph of a narrower spread revealing the greater profit AND the greater risk.
    Also, you rely upon information presented in the chapter on credit spreads (18?) to describe situations in the chapter on iron condors (19). Sometimes that information does not carry over very well. For example, how do you calculate the overall delta for an IC? Thanks again.

  8. Mark Wolfinger 02/04/2009 at 11:49 AM #

    Thanks for the ideas.
    The idea about calculating delta for IC is excellent and I’ll do that.
    I’ll discuss the graphs with publisher, and perhaps we can make the change – but I want to avoid making things complicated.