13. Stock Selection and the Option Contract

Selecting stocks based on your risk profile is never easy. This chapter offers conservative guidelines for smart stock selection. The worst criterion for picking a stock is selection based on option premium levels. By definition, high-option premiums represent greater market risk, so option premium levels are good indicators of stock market risk. This chapter proposes conservative standards, offers guidelines for managing the tax complexity of options trading, and suggests methods for using options as part of your conservative theme.

When all possible options strategies are considered in the context of your conservative profile, what are the criteria for determining which (if any) strategies are appropriate? ...

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