1 The Basics of Options

The options market is characterized by specialized jargon and terminology. This chapter explains all of the terms used and places them in context for you, as an investor. Beyond definitions, you also need to grasp the essential trading rules and to be able to read options listings found online or in the financial press.

This chapter presents a broad overview of the options market as a starting point for folding an options strategy into an equity portfolio; identifying specific risks; and understanding how to mitigate or remove an equity-based market risk.

Attributes of the Option Contract

Options are intangible contracts, granting their buyers specific rights (and imposing obligations on sellers). The amazing attribute ...

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