Diagrams that connect with each other are a much more intuitive way to learn for those less inclined to numerical formulas.  Still, the logic of the math remains robust and intact.

The layout of the book makes it easy to navigate around the text.  In addition to strategies being listed by the chapter and page there is a reference to the strategy’s main category with sub-categories, which are:

Proficiency: Novice, Intermediate, Advanced and Expert trader. Direction: Bullish, Bearish and Direction Neutral. Volatility: High Volatility and Low Volatility. Risk/Reward: Capped Risk, Uncapped Risk, Capped Reward and Uncapped Reward. Type: Income and Capital Gain.

Guy Cohen has extensive experience of both the US and UK derivatives and stock markets.  He specializes in trading and analytics applications ranging from real estate to derivatives and has developed comprehensive business, trading and training models, all expressly designed for maximum user-friendliness.

There are adequate reader reviews on Amazon and Google Book Search, to help you decide if you will get the book. For those who have just started or are about to read the book, I’ve summarized the core concepts in the larger and essential chapters to help you get through them quicker.

The number on the right of the title of the chapter is the number of pages contained within that chapter. It is not the page number.  The percentages represent how much each chapter makes up of the 302 pages in total, excluding appendices.

1  The Four Basic Options Strategies.  20, 6.62%.
2  Income strategies.  68, 22.52%.
3  Vertical Spreads.  30, 9.93%.
4  Volatility Strategies.  56, 18.54%.
5  Sideways Strategies.  44, 14.57%.
6  Leveraged Strategies.  20, 6.62%.
7  Synthetic Strategies.  54, 17.88%.
8  Taxation for Stock and Options Traders.  10, 3.31%.

Focus on chapters 2, 4, 5 and 7, which makes up about 74% of the book. These chapters are relevant for practical trading purposes.  Here are the key points for these focus chapters, which I’m summarizing from a retail option trader’s perspective.

Chapter 2: Income Strategies. These strategies construct spreads where part of the spread sells Theta as premium within a shorter term (typically 30-45 days), to collect income.  In its entirety the strategy may result in a Net Debit or Net Credit spread.  There are 13 types of spreads in this category: Covered Call, Short (Naked) Put, Bull Put Spread, Bear Call Spread, Long Iron Butterfly, Long Iron Condor, Covered Short Straddle, Covered Short Strangle, Calendar Call, Diagonal Call, Calendar Put, Diagonal Put and a Covered Put (a.k.a. Married Put).

Chapter 4: Volatility Strategies. These strategies use spreads that are indifferent to price direction, so long as price explodes out of range.  For a given explosion in price, the volatility of the spread needs to rise for a Net Debit spread and fall for a Net Credit spread,.  There are 11 spread types are defined in this category: Straddle, Strangle, Strip, Strap, Guts, Short Call Butterfly, Short Put Butterfly, Short Call Condor, Short Put Condor, Short Iron Butterfly and Short Iron Condor.

Chapter 5: Sideways Strategies. These strategies involve non-directional spreads, requiring price to drift within a confined range. As price remains range bound, the volatility of the spread needs to rise for a Net Debit spread and fall for a Net Credit spread.  There are 11 types of spreads in this category: Short Straddle, Short Strangle, Short Guts, Long Call Butterfly, Long Put Butterfly, Long Call Condor, Long Put Condor, Modified Call Butterfly, Modified Put Butterfly, Long Iron Butterfly and Long Iron Condor.

Chapter 7: Synthetic Strategies. Synthetic strategies mimic the risk profile of a stock, futures or other option position by combining calls, puts with or without stock.  Though typically, most synthetic positions are either long or short stock.  If you have a 401K plan or employee stock purchase plan that is long stock, then it may make sense to consider synthetic strategies, as you are already long Delta.  There is unlimited risk for some synthetic spreads, regardless if the strategy involves stock or not.  There are disadvantages to using synthetics.  12 spread types are defined in this category: Collar, Synthetic Call, Synthetic Put, Long Call Synthetic Straddle, Long Put Synthetic Straddle, Short Call Synthetic Straddle, Short Put Synthetic Straddle, Long Synthetic Future, Short Synthetic Future, Long Combo, Short Combo and Long Box.

From a retail option trader’s viewpoint, I prefer to establish positions without the use of stock.  Using stock synthetically in a position makes each trade more capital intensive than it needs to be.  Especially, if your trading account is below USD $50,000.  The use of stock in configuring these positions does not add material merit in controlling risk and there is no added monetary benefit in tying up available trading capital in a stock-dependent synthetic position that could otherwise be achieved without the use of stock.  As an options trader in the first place, you want as little to do with the stock itself as possible, other than to configure the required option position around the underlying product, which can be substituted with a cash-settled Index instead of a stock-settled Index.

Out of a total of 56 strategies covered in the book, I have reduced the list down to 35 Limited Risk Spread types that do not need to include stock as part of its original construction.  Limited Risk means there is a cap to the maximum loss – “Capped Risk” is the term used in the book. This should always be the starting point of any strategy you choose to construct. Do not just look at the unlimited profit (Uncapped Reward) side of the strategy without realizing that there is an unlimited loss (Uncapped Risk) side to same strategy.

Limited Risk Spreads with “Unlimited” Reward and their Directional outlook.
1. Long Call.    Bullish.
2. Long Put.    Bearish.    
3. Put Ratio Backspread.    Bearish; reverse Bullish.
4. Call Ratio Backspread.    Bullish; reverse Bearish.        
5. Straddle.    Indifferent/~Neutral.
6. Strangle.    Indifferent/~Neutral.
7. Strip.    Bearish.
8. Strap.    Bullish.    
9. Guts.    Indifferent/~Neutral.    1-9 are Debit spreads: IV needs to rise.
10. Bull Put Ladder.    Bearish.    10-11 are Credit spreads: IV needs to fall.
11. Bear Call Ladder.    Bullish.    

Limited Risk Spreads with Limited Reward and their Directional outlook.
12. Bear Put Spread.    Bearish.
13. Bull Call Spread.    Bullish.
14. Long Call Calendar.    Bullish; Indifferent/~Neutral.
15. Long Put Calendar.    Bullish; Indifferent/~Neutral.
16. Long Call Butterfly.    Indifferent/~Neutral.
17. Long Put Butterfly.    Indifferent/~Neutral.
18. Long Box.    Indifferent/~Neutral.
19. Long Call Condor.    Indifferent/~Neutral.
20. Long Put Condor.    Indifferent/~Neutral.
21. Long Iron Butterfly.    Indifferent/~Neutral.
22. Long Iron Condor.    Indifferent/~Neutral.    12-22 are Debit spreads: IV needs to rise.
23. Bear Call Spread.    Bearish.    23-35 are Credit spreads: IV needs to fall.
24. Bull Put Spread.    Bullish.
25. Short Iron Butterfly.    Indifferent/~Neutral.
26. Short Iron Condor.    Indifferent/~Neutral.
27. Diagonal Call.    Bearish.
28. Diagonal Put.    Bullish.
29. Modified Call Butterfly.    Bearish to ~Neutral.
30. Modified Put Butterfly.    Bullish to ~Neutral.
31. Short (Naked) Put.    Bullish.
32. Short Call Butterfly.    Indifferent/~Neutral.
33. Short Call Condor.    Indifferent/~Neutral.
34. Short Put Butterfly.    Indifferent/~Neutral.
35. Short Put Condor.    Indifferent/~Neutral.

Other than the 35 Defined Risk Spreads that do not require stock as part of their original construction for entry, there are 6 Defined Risk spreads that need stock to configure their positions. The 6 positions that I have deliberately excluded from the list above are the Long Call Synthetic Straddle, Long Put Synthetic Straddle, Synthetic Call, Synthetic Put, Collar and Covered Call.

In conclusion, for new to intermediate traders do not be overwhelmed by the 56 strategies in the book.  It’s entitled the “Bible of Options Strategies” for a reason. What is critical is to get a deep understanding of the Long Call, Long Put, Short Call, Short Put, Long Vertical Call/Put, Short Vertical Call/Put and the Long Calendar Call/Put. That is the 4 Basic Options Strategies, plus the Vertical and the Calendar – the only 2 strategies that floor traders define as true spreads. The other combinations are a mixture of the basics with or without stock.

To that end, we’re definitely fans of buying puts and calls, no matter what your level of options experience is. The potential for explosive returns without the need for betting the farm on each trade is unrivaled in the investing world. But we’re also fans of broadening our horizons and investing in options is one of the best places to do this. With so many different options strategies, there’s literally always a way to make a profit. Let’s look at the top 10 options strategies.

1. The Covered Call

Writing options means we are sellers of an options contract, which can be risky under some circumstances, but not with covered calls. In fact, covered call writing is probably the most conservative options-writing strategy because the contract you write is backed by your ownership of the underlying stock.

Let’s say you own 500 shares of a highly liquid blue chip stock like Microsoft. Microsoft isn’t very volatile and that makes it an ideal candidate for covered call writing. It’s a good idea to write calls on stocks that aren’t very volatile because we’re going to write out-of-the-money calls and collect some income in the form of a premium for doing so. Say Microsoft is trading at $23. We might write calls on the $25 strike for the next month’s contract. The risk here is that if the underlying stock rises above the strike price before expiration, the buyer of the call can call our stock away at $25, which is a discount to the market price.

Now you see why you have to own the stock you’re writing covered calls on and why you want to select stocks that are range-bound. As a rule of thumb, you would write one call contract for every 100 shares of the underlying you own.

2.The Married Put

Another fairly conservative options strategy is the married put trade. Married puts are a lot like covered calls in that you already own the underlying stock and you’ll buy an amount of puts equivalent to the number shares you own. Here, you’ll be long on the puts, but since you own the underlying stock, the puts act as a hedge. In other words, they give you a way to make money if the stock declines.

3. The Bull Call

There are several different options strategies known as spreads. One of the more basic ones is the bull call spread. In this trade, you buy calls at one strike price and then sell the same amount of calls at a higher strike price. So if you bought five Microsoft 25 calls, you might sell five Microsoft 27.50 or 30 calls. The contracts have to have the same expiration month and underlying security for the trade to be considered a bull call spread. This is a bullish strategy.

4. The Bear Put

The bearish cousin of the bull call is the bear put spread. Here you’ll buy puts at one strike price and then sell the same amount of puts at a LOWER strike price. Both strategies limit gains, but they also limit losses.

5. The Collar

As you can see, a lot of options strategies offer protection to investors. Another one of these trades is the protective collar. With a protective collar, you’ll purchase an out-of-the-money put option and write (or sell) an out-of-the-money call option on the same security. This strategy is used by investors that have already gotten substantial appreciation from the underlying security as a way of locking in profits.

6. The Long Straddle

Got a feeling that a stock is about to make a big move, but you’re not sure what way the move is going to go? That’s OK because you buy both a put and call with the same strike price and expiration on the same security. This is known as the long straddle and positions you perfectly to profit from a big move in the underlying, regardless of the direction.

7.The Long Strangle

A related strategy is the long strangle, but there’s a twist with this trade. With a long strangle, you’ll buy a put and a call on the same security with same expiration date, but with different strike prices. A strangle is usually a little cheaper than a straddle because you’ll be buying out-of-the-money contracts. And with both long straddles and strangles, your loss is limited to the cost paid to enter the trade.

8. The Butterfly Spread

The butterfly spread is an advanced options strategy that may seem confusing to the novice options investor. In a butterfly spread, we combine bullish and bearish spreads using three different strike prices. An example of a butterfly spread would include buying one put or call at the lowest or highest available strike price, then purchasing two of whatever we didn’t purchase in the first leg at higher or lower strike prices and then one final put or call at a lower of higher strike. Let’s try to make this easy to understand. Buy one call, buy two puts, then add another call. Voila, there’s your butterfly spread.

9. The Iron Condor

Another unique options strategy that is geared more to experienced options traders is the iron condor. The iron condor is risky and complex because you simultaneously hold a long and short position in two different strangles. This is the type of trade you need to research before randomly committing money to it.

10.The Iron Butterfly

And our final options trade that we think you ought to know is another butterfly. The iron butterfly allows investors to combine a long or short straddle with the purchase or sale of a strangle. With the iron butterfly we use both puts AND calls, not one or the other. Using out-of-the-money options is advisable to keep costs and risks to a minimum.

Options are one of the least traded investment instruments in the world. People love stock, bonds, and even Forex but shy away from options. This is because options are considered risky and complicated when in fact, they’re just another tool you can use to make money with.

More important than that, the proper use of options is the perfect way to minimize risk of other trades and recuperate losses. Options can also be used to generate a tremendous profit while risking very little money. Option Strategies Collar

So, options are just as risky as the person making the trades. If you know how to work with options they need not be so risky as people suppose.

But to do that you need to know what you’re doing so you need to take some sort of options trading course. This type of training isn’t easy. Options are more complicated than stocks. They’re a bit more complex. Also, the behave in a different way than stocks and bond do. You need a solid options trading training to be acquainted with how this market operates to take advantage of the massive opportunity it affords.

So, what is the best options trading course online? I say online because this is something you can and should do from home, at your own pace, without being hindered by other students. Of course, you can order a course to your home, but it’s good to have somewhere online to ask questions and talk with experts.

The best education source of options trading know-how is Options University. This is a group of expert traders and instructors who offer a wide range of classes for various levels of traders. I believe that taking one of their courses is an excellent way to get a firm grasp of the options trading market and to make a constant profit with it. Option Strategies Collar