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Trading Secrets: Killer trading strategies to beat the markets and finally achieve the success you deserve, 3rd Edition by Louise Bedford

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Chapter 20: Options multiply your results

In this chapter, you will learn that:

• Options are a leveraged tool, designed to be used by traders with previous experience who are trading unleveraged instruments such as equities.

• There are four main strategies you can use when trading options. You can buy a call, write a call, buy a put, or write a put. Trades combining these four separate actions are called spreads.

• If you own shares and write call options over them, you are writing covered calls. Naked calls are written when you don’t own the underlying stock.

• If you believe that the share is trending upward, an appropriate strategy would be to buy the stock, buy a call option or write a put option.

• If you believe that the share is trending ...

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