November 2017
Beginner
238 pages
5h 12m
English
Content preview from Trading Options for Edge
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Chapter 5 What Is Edge?
Edge is the value created in an option’s sale or purchase when you are able to exploit fair value to produce consistent profits. There are those that teach that edge is the embedded ‘extra premium’ that naturally exists in selling options. This is the foundational thesis of my first book, The Option Trader’s Hedge Fund. In this book, I introduced the concept of TOMIC (The One Man Insurance Company). This is an approach to trading options based on market volatility and discipline, a technique similar to that used for risk assessment by insurance companies. In this chapter, we begin to break that concept apart by discussing the relative value of an option, and how to determine if an option should be bought or sold. Thus, ...
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