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An Introduction to Options Trading by Frans de Weert

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PREFACE
This book is appropriate for people who want to get a good overview of options in practice. It especially deals with hedging of options and how option traders earn money by doing so. To point out where the profit of option traders comes from, common terms in option theory will be explained, and it is shown how they relate to this profit. The use of mathematics is restricted to a minimum. However, since mathematics makes it possible to lift analyses to a non-superficial level, mathematics is used to clarify and generalize certain phenomena.
 
The aim of this book is to give both option practitioners as well as interested individuals the necessary tools to deal with options in practice. Throughout this book real life examples will illustrate why investors use option structures to satisfy their needs. Although understanding the contents of this book is a prerequisite for becoming a good option practitioner, a book can never produce a good trader. Ninety percent of a trader’s job is about dealing with severe losses and still being able to make the right decisions if such a loss occurs. The only way to become a good trader is to accept that, when helping clients to execute their option strategies, the trader will inevitably end up with positions where the risk reward is against him but the odds are in his favour. For that reason a one-off loss will almost always be larger than a one-off gain. But, if a trader executes many deals he should be able to make money on the small ...

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