His portfolio was a graveyard of good intentions: three blue-chip stocks bleeding slowly, a growth fund that had peaked in 2021, and a savings account yielding less than the inflation rate.
And he made sure, first, to know something. Options As A Strategic Investment Fifth Edition Pdf
The Fifth Edition remains on his shelf, spine now as cracked as the first. It is not a holy book. It is a tool. A sharp one. And Arthur learned, at last, that a lever is neither good nor evil. It only amplifies what you already know. His portfolio was a graveyard of good intentions:
The real shift came in October. A rumor hit that $CHIP was a takeover target. The stock gapped up $20 overnight. Arthur had a position: a long call diagonal. His short call was blown away. His long call was suddenly deep in the money. He did not panic. He followed the McMillan flowchart: roll the short call up and out, capture the remaining extrinsic value, let the long run. It is not a holy book
His first trade was a small one. A put credit spread on $CHIP. Sell the $150 put, buy the $145 put. Net credit: $1.25 per share. Max loss: $3.75. Max gain: $1.25. Risk-reward ratio of 3:1. Not glamorous. But probability of success? McMillan’s tables said 78%.