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This jump can be attributed to a number of factors, primarily the relentless informational campaigns on the part of the Chicago Board Options Exchange (CBOE), Options Clearing Corporation (OCC), and Options Industry Council (OIC), and the extended bull market in equities during the '90s. The amount of help one can get from these industry organizations is remarkable. It is hard to find another industry that puts such effort into educating its customers.
While general usage of puts and calls has more than doubled in this period, the growth in participation has been limited predominantly to straight purchases and sales. There is no doubt that a straight order (to buy or to sell) is the easiest instruction to manage. Clearly the most leveraged use of this relatively new vehicle, being long a call (or short a call) brings the greatest level of excitement to an individual playing the market. During these go-go years we've seen the later half of the '90s, excitement, it seems, has been a governing force in the investing decisions of many.
Put and call purchases or sales are the easiest and most leveraged of strategies. These straight orders, however, miss the true advantages of options strategy. Spreads, or combinations of options, allow the investor to tailor a risk/reward profile to a much greater degree. Options professionals look at their positions from a spread viewpoint.
In The Options Workbook, we emphasize these fundamentally sound spread relationships, their composition and their effectiveness as surrogates for straight equity transactions. We'll step you through the construction of these combinations and reinforce the risk/reward profiles that each carries. There are exercises and quizzes, reinforcing the concepts discussed.
We cover the topics of put and call purchases and sales; however, with more brokerage firms streamlining their ability to handle spreads and lowering fees to do two sides, we want to emphasize the value of being spread, a concept being missed by millions of option users today.
You also will see some examples of technology used to price, execute, and manage complex option positions. Although you are only beginning your options educations, it is important to be exposed to the sophisticated tools of the pros, as access to similar software is becoming readily available for the common investor.
After completing the following lessons, feel free to e-mail us with any questions you may have about the topics covered. We will do our best to respond to your questions in a timely manner.
Posted March 18, 2001
However, there are many errors in this text, which make it rather usless as a teaching tool. On page 5 for instance the definition of a 'calender spread' is incorrect. This makes one wonder how many other errors are present in the book. Also, the site that is recomended for further study is not complete and cannot be used. Some of the descriptions in the book seem to have been transcibed from an audio presentation and are difficult to understand. Not recommended as a learning tool.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.