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