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As a beginning option trader, you might be tempted to buy calls 30 days from expiration with a strike price of $55, at a cost of $0.15, or $15 per contract. Why? Because you can buy a lot of them. Let’s do the math. (And remember, one option contract usually equals 100 shares.)
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learn about their ability and how a bias in this learning can create overconfident traders. A trader in our model initially does not know his own ability. He infers
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