Trading Options for Edge

Chapter 2 Risk Management

In this book, we are going to discuss the ins and outs of risk management. When we talk about managing risks, we are talking about understanding the risk of the positions you take, evaluating them to make sure they are within your policy guidelines, and being able to react to situations that go bad. Risk management is one of the most important keys to trading. Before you start a process of risk management you need to understand the pieces that make up risk management. The key is to understand what the facets of Greek management are that allow a trader to manage a position. This means that a trader has to understand the Greeks at a definitive level:

–Delta represents the position’s sensitivity to changes in an underlying’s ...