Learning options can seem just like learning a foreign language. Options have their own vocabulary. The first time you hear options being discussed it a lot your first day in China if you don't know Chinese.
However, learning options and the logic that drives the options market and pricing be understood by just about anyone.
Options can be used to hedge your risk if you buy stocks.
Options can be bought in conjunction with the same stock to increase return.
Options can be sold against stock you own, giving you a premium for the sale and possible retain the profit and the stock if the underlying stock never reaches the strike price.
You can buy calls and sell calls of the same stock at different prices.
You can buy calls and buy puts of the same stock at the same price.
There are countless ways to use options for hedge risk or increase return. The first step is to learn the vocabulary of options trading. I will start go over this new language in the next post.
Wednesday
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