Chapter 2: Advantages and risks
In this chapter, we will outline some of the main advantages of trading in options and why you might consider buying or selling options as a part of your overall trading strategy. We will also consider the major risks in buying and selling options, taking note that the risks involved in options are significantly different for buyers of options compared with the risks for sellers of options.
Advantages of option trading
When buying an option, you are investing in an asset with no tangible value, with a limited life, and which may be worthless within a few months. Taken in isolation, these attributes may lead you to believe that trading options is a futile endeavour. However, as you will soon discover, there ...
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