Richard Lehman | Lawrence G. McMillan
1 Good, but not much new...
This book, despite the title, does not really bring any new insights into the science (art?) of covered call writing. This material has been discussed in many different publications in many different forms. Primarily, the book is concerned with test data that aims to prove that a portfolio with long stock/short calls will outperform a long-only portfolio over time. The actual mechanics of how to do this are missing. Regardless, the data is interesting, and the discussion is useful, especially if you are a novice option trader.
2 excellent discourse on covered call writing
an excellent guide to understanding covered call writing. as a retiree and never having written covered calls, i am convinced it is an opportunity for conservative investors offering potential returns competitive with stock ownership alone and better returns than those available on bonds. mr.lehman covers all aspects, from underlying stock selection, selecting good covered writes, web sites offering all sorts of data and even tax consequences as structured by IRS.
3 Good book but lacks the "how to"
This is a good book if you already have a grasp of the basic concepts of covered call writing but are more interested in the details of why covered call writing works rather than how to use the concept to make money. The author spends a lot of time going through esoteric details on black scholes models and comparisons between the buy and hold and covered call strategy but little time is spent on providing real market examples on how to use the concepts in the book to make money. As an investor and trader my main purpose of reading any book is to learn the "how to" practical concepts that work in real market situations to enhance my profits and this is where this book is deficient. Furthermore this book does not get into the art of picking the right stocks and the timing criteria needed to decide when a covered call is a good strategy and when it is a losing one.
This book deserves at least 4 stars for explaining the covered call concept in great details and proving its usefulness. To make the best use of this book you need to couple it with one that will give more practical examples on using these concepts in real life situations in addition to strategies of picking the right stocks to write covered calls on and critical timing strategies. The book that worked best for me was the recently published September 2003 Second Edition "generate thousands on your stocks without selling them " By Elias. Elias's book has extensive real market examples with many innovative and profitable concepts.
4 Good, but not good enough
I expected a bit more from these authors. There is a wealth of data (too much) showing the viability of this strategy. This book provides convincing evidence that covered call writing is an excellent strategy - a stratgy I discovered last year after reading THE SHORT BOOK ON OPTIONS, which I also recommend.
The short book goes deeper into the basics of options. Lehman's book is for the more advanced options student.
Read both books and adopt this investment strategy. You won't be sorry (based on my profitable first year of using options)
5 A good approach to begin working with options...
As a professional in this industry, I was impressed with the book though it is hard to be certain how much was written by McMillan... There are better books to be sure, but it is tough for the average investor to start their education in options with a tome like "Options as a Strategic Investment" by McMillan (though it is fairly comprehensive and well written.) This book does a great job helping a stock investor transtion to an options investor by introducing some "baby steps" coupled with "grown-up" concepts. Covered calls are a preferrable start over more agressive strategies for those who are new to the subject matter. This book will serve new options investors quite well, and remind experienced options players of the important fundamentals.
6 Just about everything you need
I found this book to be excellent, really, but some of the nitty-gritty details about covered writing were missing. Such as computing returns in a margin account. Interestingly, McMillan covers those details in one of his other books -- Options As A Strategic Investment, so I guess I'd recommend that as a complement to this book. Overall, though, I found this book informative in the philosophy of covered writing -- why you'd want to use that strategy, and what you'd benefit by doing so.
7 Know enough to teach your broker a thing or two.
In my view, you will not find a better education on options or covered call writing anywhere. I wish other investing books were written this thoroughly. After reading this, I see now that other sources greatly oversimplified covered writing and frequently promised unrealistic returns. This book gives you all the ins and outs so you can judge for yourself what is possible, based on how you implement it. It is not beyond the capabilities of most people -- it just takes a little time to learn it and determine how best to make it work for you. I had no idea it was so flexible. The strategy makes great sense for me, yet my stock broker never even suggested it. Instead, he kept insisting I just hold on to the stocks he recommended as they kept declining. Maybe now I should teach HIM a thing or two!
8 Valuable info and a great read...
This book was by far the most comprehensive on the subject of covered call writing. After reading, I gained a tremendous amount of insight on covered call writing even though I'd tried it before. I now have a better appreciation for the tremendous capabilities of the strategy. I'm not a rocket scientist and even though it seemed this book was designed for the pros, I was able to understand it. In my opinion, money well spent.
9 A Compelling Strategy for a Low-Return World
I found this book is especially timely and useful. We are coming out of an environment where few cared about risk or did any research, and many got burned badly by the ensuing collapse of the tech/growth bubble. The book is carefully researched and lays out compelling support for the strategies it advocates. While some may accept these types of strategies on faith, I prefer the thorough detail and back-up that this book provides and think investors are more likley to gain the confidence needed to actually employ and stick with the strategies when they genuinely understand them. The people who don't want to do any work are the kind of people who got burned most badly in the bubble. That said, as options go the strategies in this book are fairly basic conceptually and not difficult for the lay reader to readily grasp and employ. They are not exotic (the fact is that options can be used for almost any purpose). As for the value of these types of strategies, in our new low-return, high volatility world, I think it is reasonable to expect that the ability to boost returns modestly while lowering risk will make its readers wealthier and sleep a little better. Nothing is a free lunch, though. If the market were to take off, these strategies would lag (but at current valuation levels this seems unlikely). Another cost, aside from the nominal price of the book, is that it putting these strategies to work will take some effort and some commitment. And you won't have much to talk about at cocktail parties. But no one has those anymore anyway--that was the roaring 90s.
10 NOT YOUR FIRST BOOK ON COVERED WRITING
This is probably not the first book you want to buy if you are like most stock investors who are trying to grasp covered writing and get started for yourself. It was written by a good technician, not a great teacher. I have no doubt that everything said in this book is accurate, but much of the information presented is on the fringe of what is necessary for most covered writers to learn how to get the job done. For me, a more simplified, step-by-step discussion on "how" would have helped with less discussion on "why." For those who want it, the technical aspects are done in great detail (e.g., 1. much discussion about Black Scholes valuation formula, 2. an enormous amount of space devoted to going back in history to demonstrate that covered writing can match returns of simple buy-and-hold stock ownership. Why spend time and space on this when knowledgeable investors are saying that stock performance in the next decades won't be anything like the past ones?). There are sections devoted to subjects that don't have anything to do with covered writing, but unfortunately less than one page was given to covered writing on Exchange Traded Funds and hot items like the QQQ. For me at least, I thought that the implementation section was the least useful part of the book. This book might help if you are interested in some of the more complex and esoteric aspects.
