A mental model that explains the fundamentals of options and futures as advanced financial strategies.
Options and futures are derivatives that give investors the right or obligation to buy or sell an asset at a predetermined price in the future. Understanding the key differences is crucial: options provide the right, not the obligation, while futures contracts are binding agreements. These instruments can be used for hedging, speculation, and enhancing portfolio returns, but they carry significant risk. To excel, focus on the underlying asset, market conditions, and expiration dates to make informed decisions that align with your financial goals.
The stock market is filled with individuals who know the price of everything, but the value of nothing. - Philip Fisher
