Paul 42 who claims he has followed the sahre market since he was a teenager, he has a good grasp of the share market. his share portfolio is worth $100,000/ His objective is to generate large gains without a large outlay by taking a calculated risks on the market trading derivatives on the top 30 companies. He has an investment in a fund that usese derivatives.He can use cash or stock covered strategies but may not use these to leverage the portfolio. What does this mean????

First of all, Paul has the requisite experience most brokerages require to trade options. Options inherently have leverage built in. Each option contract represents the right to buy (a Call option) or sell (a Put option) 100 shares of the underlying stock at a predetermined price (known as the strike price) for a given time interval (known as the expiration date).However, in the above scenario, Paul may use "covered" strategies, meaning that he has to buy or sell 100 shares of the underlying stock for each option he sells. In a covered call strategy, an investor buys 100 shares (or more) of a given stock, and then sells 1 call option per 100 shares purchased. The margin requirement for the option thus sold is $0, since the investor has shares to deliver against the option should it trade higher than the strike price and be "called" away. This is a very conservative strategy, and is often used by investors to generate extra income in their portfolios, since they get to keep the premium received from the sale of the call. Of course, in return, they cap their potential upside.I hope this answers your question. A good web-based resource for further research is www.cboe.com.