CHAPTER 4OPTIONS AND TRADING TECHNIQUES: THE SECRET SAUCE

Used correctly, options are an excellent tool that you can use to leverage your capital so that you achieve truly outstanding gains, hedge your portfolio during times of market uncertainty, and generate income during periods of market stagnation. Used incorrectly, options are an excellent tool for completely imploding your portfolio.

In the typical evolution of a retail investor, after he has learned how to short the market, the investor starts to see popup ads on his favorite financial sites touting the glorious benefits of options. The next step is usually to research options briefly, then download an options trading application from his broker.

After answering a few questions, the trader ...

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