Create Your Own Hedge Fund: Increase Profits and Reduce Risks with Etfs and Options - Hardcover

by Mark D. Wolfinger (Author)

Discover a practical trading strategy that combines options and ETFs.

Create Your Own Hedge Fund explains how exchange-traded funds can be used in conjunction with an options strategy to attain steady growth. Beginning with a tutorial on options and ETFs, the book goes on to describe both investment approaches in great detail providing you with a trading strategy that generates higher returns than buy-and-hold investing -- and allows you to reduce risk by adopting a hedging strategy. Filled with in-depth insights and expert advice, this book is intended for you if you're a sophisticated individual investor or a professional investor, trader, or other money manager looking to update your arsenal of investment tools.

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Front Jacket

Millions of investors have lost trillions of dollars to turbulent markets over the past five years. Millions of others, however, have used innovative strategies to hold their own and even see their portfolios increase in value. Create Your Own Hedge Fund outlines one such strategy using exchange traded funds (ETFs) and options.

ETFs such as DIAMONDs and VIPERS are fast replacing traditional mutual funds among investors attracted by their reduced expenses and increased versatility and variety, along with the fact--critical to the book's strategies--that ETFs trade on exchanges and are optionable. Option writing, on the other hand, has proven to give investors more winning positions, fewer losing positions (with smaller losses when they do occur), and less fluctuation in portfolio value.

Create Your Own Hedge Fund combines the best aspects of both ETFs and options into an investing program that works well in both bull and bear markets, is affordable for the bulk of investors, and provides overall package returns that are steadier and more predictable than those provided by its component pieces. This results-driven book is divided into four parts that fully examine each element:

PART I discusses the foundation of the book's program, Modern Portfolio Theory (MPT), and why MPT makes it difficult, if not impossible, for investors to beat the market. It then introduces the advantages and drawbacks of hedge funds, and how to invest like a hedge fund with less risk and lower cost.

PART II discusses mutual funds, both traditional and newer exchange traded funds, and explains why ETFs are a superior alternative for the majority of investors.

PART III covers the basics and mechanics of options and option writing, a strategy that is historically considered risky but actually entails far less risk than traditional buy-and-hold.

PART IV provides the payoff, explaining how to construct a foundation portfolio and choose an option to write, then providing detailed examples of option writing in action.

Create Your Own Hedge Fund details an uncomplicated investment program that utilizes the best aspects of a hedge fund to provide market-beating returns while significantly reducing risk. Straightforward and understandable, it will show you how to remove heart-stopping swings from your portfolio's performance--without sacrificing the performance itself.

Back Jacket

Options writing made simple for the layman.
--James Altucher, author of Trade Like a Hedge Fund

"One of the clearest explanations of how to use options as they were originally intended: as a component of an overall strategy in conjunction with other positions."
--Robert V. Green, Investment Strategist, Briefing.com

"Wolfinger combines the versatility of options and the benefits of diversified exchanged traded funds to present an amazing new form of low-risk, enhanced return investing. Whether you are new to options and ETFs or a long-time trader, the book details a straightforward, simple-to-follow method of creating a hedged portfolio in any market condition with significant returns."
--Philip Budwick, coauthor of The Option Trader Handbook: Strategies and Trade Adjustments

Innovative techniques for combining two popular trading tools--option writing and ETFs--into one practical and profitable investment strategy

To provide their clients with consistently better-than-average returns, successful hedge fund managers can choose from an impressive array of investment vehicles. Create Your Own Hedge Fund reveals how to combine two of these tools, option writing and exchange traded funds (ETFs), into a powerful technique that will provide the benefits of a hedge fund--managed risk exposure and better-than-average returns--without the six-figure initial investment requirements.

Detailing every aspect of this solid and straightforward procedure, veteran market maker and trader Mark Wolfinger explains:

• The superiority of ETFs over traditional mutual funds
• Two options strategies designed to generate cash flow--covered call writing and uncovered put writing
• How the two investments work in concert to provide excellent returns in bull markets while reducing bear market losses

On their own, options and ETFs are among today's most popular investment choices. Create Your Own Hedge Fund details a strategy for combining the two into a powerful investment approach that reduces risk while enhancing returns, and is suitable for knowledgeable investors of all types and temperaments.

Author Biography

Mark D. Wolfinger has been in the options business since 1977, starting as a market maker on the trading floor of the Chicago Board Options Exchange. He also worked for trading companies as an off-floor trader, trainer of newly hired traders, and risk manager. For the past four years, Mark has served as an educator of public investors, showing them how to intelligently and conservatively use stock options. This is his second book on options.