Investing Not bad, butif the stock went to $29.50 then you would have missed out onanother $1.00 profit. If you were to short the stock you need to be able to cover you position. If you choose to roll the positionthen you must be somewhat bullish on the stock. An investor feels there is some limited downside for a stock but is not as confident as an outright call writer and as a result buys the higher strike price call to cap upside risk. If theoption is going to expire in-the-money and you want to keep thestock you will need to buy the short option back and sell thenext months call. Other times, you may have to buy your short call back so thatyou will not lose your stock. Put Writing (Short Put): Simply sell put options on a stock. If you bought the Call Options your profit would be {(550-500)-16}*100 = $3400. Normally time spreads have a neutral basis but they can also be designed for a bullish or bearish basis. Long (buy), where you do long call in bullish condition and long put in bearish condition. You buy puts with a strike of $25 1 month to expiration for say $1. You dont want to get rid of the stock but youalso dont want to lose any money so you sell the 27.5 call at$2.00. After all, if that was possible, how could anyone ever lose any money in the market? And if nobody loses, then how can someone else gain? The whole stock market would collapse. After all, if that was possible, how could anyone ever lose any money in the market? And if nobody loses, then how can someone else gain? The whole stock market would collapse. Strike price is the price where an underlying stock can be purchased. When is it used?Call option writing is used by investors to generate additional income. When you feel that you want to lean your covered call strategy(buy-write) a little short, choose to sell an in-the-money callso you can also have some intrinsic value to cover yourdownside. For example, we would initiate a Straddle for company ABC by buying a June $20 Call as well as a June $20 Put. So, when you roll out your covered call or buy-write, you do itby doing a spread. With the put options on google (GOOG) your risk is limited to you initial investment while your rewards could be substantial. A put option is in-the-money when the share price is below the strike price. When you trade options, the stakes are raised, making those massive profits even more attainable, but the basics that underlie successful trading in the stock market are the same as those for trading options. At expiry, as long as the Apple (AAPL) is trading above (120 6 = $114) you have made a profit. The premium receivedwill offset the loss due to the fact that you identified andadjusted for a likely move. For call options, the option is said to be out-the-money if the share price is below the strike price. In the case of Straddles, you will be safe either way, though you are spending more initially since you have to pay the premiums of both the Call and the Put. The bottom line is: for a Straddle strategy to be profitable, there has to be volatility, and a marked movement in the stock price. Writing the put options obligates the investor to buy the stock from the option buyer if the stock price decreases below the strike price and the option buyer decides to exercise the option. The greater the bearishness of an investors forecast, the further out of the money and further apart the strike prices should be. This is often employed when an investor has a short-term neutral view on the asset and for this reason hold the asset long and simultaneously have a short position via the option to generate income from the option premium. If, over the life of the contract, the asset value decreases, the buyer can simply elect not to exercise his/her right to buy/sell the asset. If you had bough 3 shares your profit would be ($550-500)*3 = $150. If you choose to roll the positionthen you must be somewhat bullish on the stock. We decide to buy a $65 Call and a $65 Put on XYZ, $65 being the closest strike price to the current stock price of $63. About the Author: 相关的主题文章:

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