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This chapter is from the book


The discussion in this chapter focused only on some of the more common uses of call and put options. A variety of strategies use options in other ways to enhance the opportunity for making a profit under the appropriate circumstances. Many of those strategies are presented in this book.

Time is money. This phrase should always be in the back of your mind as you deal with options. Remember that the value of an option decreases in time when everything else remains unchanged. When you own an option, time is your enemy. When you have sold an option, time is your friend.

Before you can begin trading options, you need to consult your broker to determine what types of option trading will be allowed in your account. The types of allowed trades will depend on the size of your account as well as whether it is a retirement account. Upon receiving approval, you will be able to do options trading in your brokerage account much like you do stock trading, either by directing your broker to place orders or by online transactions done by yourself.

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