Review of 'Scientific Trading Methods More Profitable than Stocks' and 'Super Stock Investment'
Option investments can be fascinating due to their infinite combinations. However, this also means it can be difficult to determine which strategy to use in a given situation.
In this article, I will introduce two excellent books that explain option strategies, both written by the same author. Incidentally, both books have some overlapping content.
Note that I read these books in 2015, but I still have my notes, so I decided to write this article.
Scientific Trading Methods More Profitable than Stocks
Overall evaluation: +1 (Recommended)
According to the author's blog post, the title and layout of the book are not ideal due to the publisher's decisions. However, the content is easy to understand and practical, making it perfect for beginners. Since the content overlaps with "Super Stock Investment," if you only want to learn about option strategies, this book is sufficient.
Overview
The book introduces six types of option strategies that can achieve higher returns than holding the underlying assets:
- Put selling and cash-secured put selling (CSP)
- Covered call (CCW)
- Vertical spread
- Butterfly
- Iron condor
- Diagonal spread
Good points
The book explains each strategy in an easy-to-understand manner, providing examples and scenarios. It also includes information on how to improve the Sharpe ratio compared to holding the underlying assets.
Moreover, the book provides practical explanations of each strategy, including exit strategies such as stop-loss. For example, it explains the detailed criteria for bull put spreads:
- Short put: "Strike price 0.2 times IV lower than the underlying asset price (K1)"
- Long put: "Strike price 3% lower than K1"
- Stop-loss: "10% loss or 2% lower than K1"
The book also explains how to combine covered calls with bull put spreads to increase profits.
Bad points
Although the content is excellent for beginners, there are some drawbacks. The vertical writing style is difficult to read, especially when there are many numbers involved. Additionally, the title "Scientific" is unclear, and it is not evident what it refers to.
These issues are likely due to the publisher's decisions, as the author mentions in their blog post.
Summary
Overall, the book is well-organized and easy to read, making it perfect for those interested in option investments. It provides all the necessary knowledge in one book, and I highly recommend it.
Super Stock Investment
Overall evaluation: +0 (Recommended for some)
Since the content overlaps with "Scientific Trading Methods More Profitable than Stocks," I only recommend this book for those who need to learn about ETFs.
Overview
The book is divided into two parts: the first part introduces ETFs, and the second part explains option strategies. The second part overlaps with "Scientific Trading Methods More Profitable than Stocks."
Good points
The first part provides a concise introduction to ETFs, including a comparison of different ETFs and how to combine them into a portfolio. This is perfect for those who are new to index investing.
The second part explains option strategies using CSP and CCW, providing a clear image of how to achieve returns.
Bad points
The book has some drawbacks, such as being too verbose or lacking clear explanations. The first part includes some unnecessary information, and the second part lacks clear explanations of when to use each strategy.
Summary
Although the book has some drawbacks, it is still a good resource for those who want to start index investing or learn about option strategies. However, the second part may not be as useful due to the overlap with "Scientific Trading Methods More Profitable than Stocks."
Recommended reading
If you find this book difficult to understand, I recommend reading the author's "Covered Call for Weekend Investors." It provides a more concise and simple explanation of the strategies.
Other reviews
Other bloggers have also reviewed these books, so please refer to their reviews for more information.
- http://blog.livedoor.jp/kappa_ccw/archives/38883538.html
- http://akipop2013.blog.fc2.com/blog-entry-68.html
- http://scientistdiary.blog.fc2.com/blog-entry-37.html
- http://blog.goo.ne.jp/fusiminohikaru/e/322eba079ddd8e3f3ad8ac71ef302140
- http://garboflash.blog.fc2.com/blog-entry-184.html
- http://fairvalueinvestment.blogspot.jp/2014/10/blog-post.html
- http://ishippon.blogspot.jp/2014/05/blog-post_25.html
Final summary
I introduced two books by kappa that provide excellent explanations of option strategies. Although they have some drawbacks, they are perfect for beginners. I highly recommend reading these books and the author's blog for a deeper understanding of option investments.
