Essay by PaperNerd ContributorUniversity, Master's May 2001

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Memorandum Date: To: From: Re: Research and Audience proposal Statement of the Problem: The trader entering the option market for the first time may find that the effort they apply is not going to be enough to be successful. In actuality the trader that is turned away from the option market is most likely not going to want to return to it and reinvest money. The option market can become extremely complex and overwhelming in times of high market volatility. When trying to grasp the concept of trading options it requires a tremendous amount of work and patience. The best option traders have never been able to grasp the concept over night. In many circumstances the better option traders have been exposed to the market for several years. The characteristics of the option market are seen as risky and unstable which seem to turn the inexperienced trader away from the option market and into the stock or bond markets.

The frustration that is usually associated with new traders and the option market could be avoided if the trader was more knowledgeable about the realities of the option market.

Proposal Report: It is evident that the problem is that investors are not educated about the option market and they are not taking advantage of the markets potential. The type of report that I am planning on writing is directed towards financial advisors and will discuss the importance of them educating and exposing there clients to the option market. In an attempt to make the financial advisors more aware of the benefits and opportunities that the option market has I am going to illustrate ways in which even the most inexperienced investor can benefit from this market. My thesis statement is the following: The option market is versatile and can be used...