Chapter 18 Risk: Rules of the Game

All this worldly wisdom was once the unamiable heresy of some wise man.

̶̶ Henry David Thoreau, Journal, 1853

A tremendous opportunity awaits anyone who considers including options in a portfolio. When you review the broad range of possible uses for options, they can serve the interests of a wide spectrum of investors. At the same time, you must recognize the broad range of risks in option investing. As a trader, your status as a stock investor could be affected by the option-related decisions that you make.

Reducing exposure (risk) using options has caused the tremendous growth of the options market over the past 40 years. The singular feature of options for risk management is a primary underlying cause of ...

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