Using Calls To Create Synthetic Leverage by Matthew J. Stander
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:3 (62-66): Using Calls To Create Synthetic Leverage by Matthew J. Stander
Before you take the plunge and buy a call option, you should consider whether you know everything you can about doing so.
Traders frequently buy call options to increase returns on long positions without first taking the time to understand the complexities of option pricing. For a sophisticated options trader with the ability to change positions in milliseconds, pricing models like Black-Scholes provide valuable guidance for establishing derivative positions. However, most traders could benef...