Preface 
When the listed option market originated in April 1973, a new world of investment 
strategies was opened to the investing public. The standardization of option terms 
and the formation of a liquid secondary market created new investment vehicles that, 
adapted properly, can enhance almost every investment philosophy, from the con­
servative to the speculative. This book is about those option strategies -which ones 
work in which situations and why they work. 
Some of these strategies are traditionally considered to be complex, but with 
the proper knowledge of their underlying principles, most investors can understand 
them. While this book contains all the basic definitions concerning options, little time 
or space is spent on the most elementary definitions. For example, the reader should 
be familiar with what a call option is, what the CBOE is, and how to find and read 
option quotes in a newspaper. In essence, everything is contained here for the novice 
to build on, but the bulk of the discussion is above the beginner level. The reader 
should also be somewhat familiar with technical analysis, understanding at least the 
terms support and resistance. 
Certain strategies can be, and have been, the topic of whole books - call buy­
ing, for example. While some of the strategies discussed in this book receive a more 
thorough treatment than others, this is by no means a book about only one or two 
strategies. Current literature on stock options generally does not treat covered call 
writing in a great deal of detail. But because it is one of the most widely used option 
strategies by the investing public, call writing is the subject of one of the most in­
depth discussions presented here. The material presented herein on call and put 
buying is not particularly lengthy, although much of it is of an advanced nature -
especially the parts regarding buying volatility and should be useful even to sophis­
ticated traders. In discussing each strategy, particular emphasis is placed on showing 
why one would want to implement the strategy in the first place and on demonstrat-
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