OptionsWise how to invest sensibly
Many people find out about exchange traded options from “free” seminars
that claim they will make you rich. Alternatively they discover options
by interacting with a financial adviser or broker who introduces them
as a way of enhancing income returns from a share portfolio or as part
of strategies to protect shares within a portfolio. Yet another way can be
through friends who are involved in options and have had some good
experiences.
Options can be made to look very exciting and many people sign
up for an options course or other products and services associated with
them that can be the real reason for the “free” seminars. Or they get
into strategies a broker or adviser or a friend suggests without really
appreciating the risks and fees involved.
Before embarking on trading options on such limited information, I
urge anyone who is attracted to them to become very familiar with what
they actually are and how they work.
While options can be made to appear exotic and exciting, in their
most practical form they are really an alternative way of trading shares.
You can’t trade options and know nothing about shares. But you can
through options invest or trade in some of the most prominent shares
on the Australian stock market and enhance your returns or protect your
investments.
To do so successfully what can’t be emphasised enough is that you
need to know what you are doing.
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OptionsWise
OptionsWise by Wai-Yee Chen will help you in this regard. In my view
no-one should spend any money trading options without first gaining the
sort of practical knowledge this book contains. If you invest some time
doing this, you will quite likely find that people who claim options are
risky will either be those who have never used them or who have traded
options without the full and necessary knowledge that is required.
Whether you are a direct share investor or invest in shares as a trustee
of a self managed super fund, what you should gain from this book will
go well beyond what any seminar or discussion you have with an adviser,
broker or friend will give you. Once you have this, I believe you will
understand that options are no more risky than investing in shares and
can actually help make you a better share investor.
John Wasiliev, Columnist
Australian Financial Review
November 2009
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