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® “Home-Study Course” Study Manual Page 5

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Attention Option Traders

If you trade Options, you will apply the ART® principles to the chart of
the underlying asset. You will be trading the Option of that underlying
asset.

There are many ways to trade Options, but ART® focuses on buying
deep “In-The-Money” “Call Options” to go LONG and buying deep
“In-The-Money” “Put Options” to go SHORT. Some traders like to
SELL Options but here we’ll work on how you can use ART® to

TRADE Options.

The key in trading Options short-term is to be sure you are trading the
most liquid “Contract Month” and choose a “Strike Price” that yields a
DELTA as close to 1:1 as possible. A DELTA of 1:1 means that when
the underlying asset changes price, the “Premium Price” of that Option
also changes by the same amount.

To achieve this, you need to trade an Option that is “In-The-Money”
enough to obtain as close as possible to a 1:1 DELTA. This eliminates
the “Time Value” of the Option so you can make an equal amount on
the Option as the underlying asset when it changes price. Don’t forget,
not only is the 1:1 DELTA important, but so is choosing the Option with
sufficient liquidity, to achieve adequate fills quickly when entering and
exiting short-term trades.

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