Options Made Easy - Or At Least Easier
Which Option Strategy Should You Use? Guy Cohen Tells You
by Jayanthi Gopalakrishnan
Guy Cohen, creator of the OptionEasy software and author of the books Options Made Easy and The Bible Of Options Strategies, has had extensive experience in trading and analyzing both the US and UK derivatives and stock markets. Specializing in trading and analytics applications ranging from real estate to derivatives, Cohen has developed some of the most comprehensive business, trading, and training models, all specifically designed for maximum user-friendliness.Cohen has a master's in business administration with a concentration on finance from City University Business School and also teaches individuals, specializing in trading psychology, technical analysis, and options strategies.
Stocks & Commodities Editor Jayanthi Gopalakrishnan interviewed Guy Cohen in early June 2005, using a combination of online audio chat, instant messaging, and email.
Amazingly, most folks trade on a whim. They don't plan their entry points, exit points, or stops. They might as well be gamblers.
I got into options while I was studying for my MBA, where I took options specialist classes. Prior to that, I'd been in commercial real estate. My rationale for doing my MBA was to increase my financial capabilities. I'd already completed various finance exams in order to become an analyst, but I felt that an MBA, particularly one that was finance-oriented, would be a great feather in my cap.
After I completed my options exams successfully and got a grasp of the academics, I launched into trading options for real. That's when I discovered the difference between understanding how an option works, and the more practical test of how to actually trade options.
Big difference there!
So true! At the time, the options software around wasn't too helpful, so the only way for me to make progress was to build my own application. So that's what I did. I needed an application that was highly visual, where I could see my risk profile and any other important factors to do with my strategy or trade. Initially, I began in Microsoft Excel, and from this original spreadsheet I started to add new strategies and modules.
I built each strategy by hand into the spreadsheet, and that's where I began to understand the intricacies of each and every strategy, why and how they moved in different time frames. And then I traded each strategy for real, just to intensify the learning experience for myself - nothing like having some real chips on the table!
That's true! Is this what gave you the idea for writing The Bible Of Options Strategies?
Yes, basically that was the inspiration. There was a need for a reference book, and I already had the material.
Given that there are so many stocks and so many option strategies, how does one go about finding the right stocks to trade?
This is a crucial part of trading. What the question really asks is: Do you have a trading plan? And the answer should be Yes! Emphatically!
However...
Most people, however, don't. Amazing but true, most folks trade on a
whim. They don't plan their entry points, exit points, or stops. They might
as well be gamblers.
...Continued in the August issue of Technical Analysis of STOCKS & COMMODITIES
Excerpted from an article originally published in the August 2005 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2005, Technical Analysis, Inc.
Return to August 2005 Contents