Introduction to Option Trading Part Three

Market timing is important It's important, even critical, to know the phase of the market. Experts agree that 60% of a stocks movement is the result of the markets movement, and 30% is the result of the movement of the group within which the stock resides. That leaves only 10% of a stocks price movement attributed to the stock itself. It's important to understand the phase of the market. Follow-up actions The importance of thoroughly understanding a strategy and its suitability for your personal investment objectives cannot be overemphasized. You should also be aware of the follow-up protective actions that can be employed to limit losses should the market move against you. Recommended books for the newcomer to read include: Gastineau, Gary L. THE OPTIONS MANUAL, 3rd ed. McGraw- Hill, New York 1988 McMillan, Lawrence G. OPTIONS AS A STRATEGIC INVESTMENT, New York Institute of Finance, New York 1986 Cox, John C. and Mark Rubinstein, OPTIONS MARKETS, Prentice-Hall, Englewood Cliffs, NJ 1985

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