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Trading Commodities, Commodity Options and Currencies (Collection) by Carley Garner, Paul Brittain

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chapter 3Long Option Strategies

A long option strategy is just as the name implies. It might include the purchase of a single option or it might be the purchase of an option spread in the form of a strangle or a straddle. In any of these long option strategies, the risk is limited but the reward is theoretically unlimited. This chapter will focus on the mechanics of the strategy as well as the limitations. In our opinion, long option traders are forfeiting some of the probability of profit potential for a piece of mind. As a long option trader the absolute worst case scenario for a particular trade is to lose all the money spent on the option or option spread. This is true regardless of how wrong the original speculation turned out ...

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