All posts tagged leverage


Options increase leverage.

What this means to me:

Options are a trading tool that allow me to put fewer dollars on the table to make a trade.

What this belief gets me into:

This enable me to hold more positions that trading stocks alone.
I need to understand options and their pricing.
I have to make sure the option is liquid enough to trade.
I have to subscribe to more market data.
It is easier to put on large positions.
I could have positions that are too large.
Options activate my excitement part.
Satisfying or keeping my excitement part in check.
Examining why I need leverage.

What this belief gets me out of:

Having to only trade stocks.
It reduces the limitations of my capital.

Limitations of this belief:

This belief seems to be more of a fact.

Utility of this belief:

This is certainly more useful than options are dangerous or options are risky. There does not seem to be any emotional charge with this belief.


The real issues to examine here are why use options and why use leverage? What do those items represent for me? Options are a leveraged trading instrument. How I use options and leverage are the real issues to be examined.