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Options Trading by Ann Logue

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CHAPTER2

How Options Work

In This Chapter

  • Reading option quotes
  • Understanding option premiums
  • Managing margin through the mark to market
  • Moneyness—it’s a thing

Now that you have the basic vocabulary down, it’s time to get into the details of how options work. The contracts have lots of different specifications, and the more you understand about them, the more successful you’ll be.

The exchanges that handle options have different rules, and they sometimes change the specifications of different contracts. It is very important for you to review the rules for each contract with the exchange itself before you begin. Doing so ensures you won’t be ...

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