Introduction to Options Trading
Options are powerful tools in the financial world. They give the holders the right, but not the obligation, to buy or sell an asset in the future at a price determined today. They are used as insurance and as a source of speculative profits. The value is derived from the value of an underlying asset or security, but it is not identical to the value of that asset or security.
Options come with their own set of vocabulary and procedures that are important to know before using them. Chapter 1 covers the very basics, Chapter 2 looks at reading price quotes and placing orders, and Chapter 3 explains how the exchanges and other institutions work. Chapter 4 reviews the mathematics behind options, a key factor needed to value them. Even if the math is more than you had in school, it influences popular trading strategies and is used in discussions of options. Don’t worry, you can pick it up.