Chapter 3. Options in Context

Option risks affect how we proceed; perceptions, sometimes false, inhibit us from taking full advantage of the conservative potential of options. This chapter provides valuable details about designing conservative short positions, special margin requirements for option strategies, and calculating option returns on a comparative basis.

Any investment strategy—from plain to exotic—contains specific attributes and can be defined in terms of risk, rates of return, and specific strategies for various market conditions. Options are probably the most flexible investment products available. They can be used alone, in combination with other options, or as hedge devices to protect other positions. Options can help you to exploit ...

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