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Chapter 2. Option Basics

Chapter 2. Option Basics

The biggest hurdle in the options market is terminology. This chapter explains the basic concepts and defines option terms; introduces call and put strategies; explains how long and short positions work in both types of option contracts; and provides an overview of the options market.

Typically, books about options start by showing how you can leverage a small amount of capital to make fantastic profits, often in the triple digits. Such books tend to quickly become overly technical and complex, so that you end up with two problems. First, you are exposed to the proposition that you can get rich by speculating in options; second, the discussion becomes obscure as the details emerge.


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