This article was originally published in The Option Strategist Newsletter Volume 14, No. 17 on September 9, 2005.
In our last issue, we discussed the general concepts of leverage: trading stocks on margin, trading futures, and options – either long or naked. The most important point that was made is that leverage is neither inherently good nor bad, for it is within your control. If you want less of it, then boost your investment to reduce the leverage; if you want the maximum amount of it, fine – but be aware of the increased risk and reward percentages that accompany high leverage.
This article was originally published in The Option Strategist Newsletter Volume 14, No. 16 on August 25, 2005.
Most traders realize that leverage is available through margin accounts, futures, and options, but give it little thought in terms of constructing strategies or even in terms of developing broader trading plans – i.e., business plans.
