options strategic investment

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Gene;If you want the Bible of Options there is only one book. "Options as a Strategic Investment" by Lawrence McMillan. Get the latest edition which is the 5th edition. It will set you back $60 +- but well worth it. Like Rodney Dangerfield, the spread gets no respect here. First, spreads seem more profitable, hands down. For the same capital at risk, spreads offer much-higher annualized returns. Example, the 1 August IWM 108.50 / 108.00 put spread generates an annualized return of 153%, and $480 per $6000 of capital at risk. In comparison, the cash-secured IWM put (1 August, $108.50 P @ .37) generates an annualized return of 6.91% and a net gain of $39 per $10,850 of capital at risk. No contest. The greater profitability of the spread allows the investor to increase safety set by setting the short strike much lower than you could do with the simple put and still make a decent profit. The risk that the short strike might be assigned early is easily solved. If the investor is notified by email on all transactions, he can quickly exercise his long strikes and the shares gained offset the shares that must be delivered. The broker treats this as a wash. If early assignment is still a concern, write spreads on an index, like the Rut, which cannot be exercised, only settled for cash at the expiration date. For example, with RUT @ $1159.92, the 1 August 1080 / 1070 put spread (premiums 2.83 and 2.25 respectively) generates an annualized return of 111% and a net gain of $348 for $6000 of capital at risk. You can't come close to this with a simple RUT put at the same strike, same capital at risk.