25 lines
1.5 KiB
Plaintext
25 lines
1.5 KiB
Plaintext
1
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Part I
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OptiOns FOr the
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intelligent invest Or
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Don’t believe anything you have heard or read about options.
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If you listen to media stories, you will learn that options are modern
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financial innovations so complex that only someone with an advanced
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degree in mathematics can properly understand them.
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Every contention in the preceding sentence is wrong.
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If you listen to the pundits and traders blabbing on the cable business
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channels, you will think that you will never be successful using options
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unless you understand what “put backspreads, ” “iron condors, ” and count-
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less other colorfully named option strategies are. Y ou will also learn that
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options are short-term trading tools and that you’ll have to be a razor-sharp
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“technical analyst” who can “read charts” and jump in and out of positions
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a few times a week (if not a few times a day) to do well.
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Every contention in the preceding paragraph is so wrong that believing
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them is liable to send you to the poor house.
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The truth is that options are simple, directional instruments that
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we understand perfectly well from countless encounters with them in
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our daily lives. They are the second-oldest financial instrument known to
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humanity—in a quite literal sense, modern economic life would not be
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possible without them. Options are instruments that not only can be used
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but should be used in long-term strategies; they most definitely should be
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traded in and out of as infrequently as possible. |