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Buying Options on Futures Contracts: A Guide to Uses and Risks
Following is the Buying Options on Futures Contracts: A Guide to Uses and Risks main table of contents. To download any of these sections, click the appropriate link.
Disclaimer
Introduction
Part One: The Vocabulary of Options Trading
Part Two: The Arithmetic of Option Premiums
Intrinsic Value
Time Value
What’s “time value?”
Part Three: The Mechanics of Buying and Writing Options
Commission Charges
Leverage
The First Step: Calculate the Break-Even Price
Determining the break-even price for a call option
Determining the break-even price for a put option
Factors Affecting the Choice of an Option
The length of the option
The option strike price
After You Buy an Option: What Then?
Offsetting the option
Continuing to hold the option
Exercising the option
Who Writes Options and Why
Risk Caution
Part Four: A Pre-Investment Checklist
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