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The Investor's Toolbox: How To Use Spread Betting, CFDs, Options, Warrants and Trackers to Boost Returns and Reduce Risk: Fully Revised and Updated Second Edition

Book Description

This book is a simple, practical guide to how you can use some of the newer investment products like spread betting, binary betting, contracts for difference, covered warrants and exchange-traded funds, as well as older ones like futures and options, to help your investing. In different ways, each of these products allows you either to: - boost the returns you get in exchange for taking on greater risk; - hedge your bets in exchange for slightly lower returns; - use much less capital to achieve the same market exposure; or - move money into and out of a range of markets and sectors efficiently. The author believes they are tools that all investors need to know about and be able to use when the occasion demands it. They should help you successfully confront any lengthy period of trendless or volatile markets. While the past three years has seen a generally strong upward trend in stock markets, this is not bound to continue. Periodic volatility is the natural order of things. Interestingly enough - despite what appears to have been a bull market - recent years have also seen increased use by private investors of many of the tools described in this book. Proof, if needed, that they work, and can be applied, in all market conditions.

Table of Contents

  1. Cover
  2. Publishing details
  3. About the author
  4. Acknowledgements
  5. Preface
  6. Introduction
  7. 1. Derivatives History
    1. Introduction
    2. Help for farmers
    3. The magic formula
    4. Futures markets proliferate
    5. New products take the limelight
  8. 2. Basic Concepts
    1. Underlying
    2. Contracts
    3. Cash settlement
    4. Expiry dates
    5. Fair value
    6. Gearing
    7. Hedging
    8. Indexes
    9. Margin
    10. Short selling
    11. Time value
    12. Volatility
  9. 3. Futures
    1. Basic futures
    2. Futures prices
    3. What you can trade
    4. Beware the professionals
  10. 4. Contracts for Difference
    1. CFD Basics
    2. CFD mathematics
    3. CFD Rules of the Road
    4. A final word on gearing and risk
  11. 5. Spread and Binary Betting
    1. Advantages of spread betting
    2. Margin
    3. Types of bet
    4. Binary Betting
    5. A final word
  12. 6. Options
    1. What is an option?
    2. Calls and Puts
    3. In and out-of-the-money
    4. Volatility
    5. Options prices and how they are calculated
    6. Where to find options
    7. Option trading as speculation
    8. Option trading as insurance
    9. Postscript – writing options
  13. 7. Warrants and Certificates
    1. Traditional warrants
    2. Covered warrants
    3. Basic Strategies
    4. How the warrant market may develop from here
  14. 8. Exchange-Traded Funds
    1. History of ETFs
    2. How do ETFs work?
    3. The pluses and minuses
    4. Where are ETFs quoted?
    5. Why you should consider using ETFs
    6. Where ETFs go from here
  15. 9. Dealing
    1. Opening an account
    2. Futures
    3. Spread Betting
    4. CFDs
    5. Options
    6. Covered Warrants and Certificates
    7. ETFs
    8. Afterword
  16. 10. Trading Strategies I: Futures, CFDs and Spread Betting
    1. Futures strategies
    2. Afterword
  17. 11. Trading Strategies II: Options and Warrants
    1. Geared speculation
    2. Hedging
    3. Writing options
    4. Complex strategies
  18. 12. Developing Your Plan
    1. Trading Rules
    2. Money management
    3. Trading tips for specific investment tools
    4. Developing your plan by looking at your assets
    5. Using charts and other software
  19. Appendices
    1. Appendix 1 – Derivatives Comparison Chart – Dealing Specifics
    2. Appendix 2 – Finding the Information
    3. Appendix 3 – Software
    4. Appendix 4 – Further Reading
    5. Appendix 5 – Glossary of Websites