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The calendar call spread (see calendar spread) is a bullish strategy and consists of selling a call option with a shorter expiration against a purchased call option with an expiration further out in time. The calendar call spread is basically a leveraged version of the covered call (see above), but purchasing long call options instead of ...
Unlike selling a call option, selling a put option exposes you to capped losses (since a stock cannot fall below $0). Still, you could lose many times more money than the premium received.
A covered call is a kind of hedged strategy, in which the trader sells some of the stock’s upside for a period of time in exchange for the option premium. Normally, selling a call option is a ...
A covered call involves selling a call option (“going short”) but with a twist. Here the trader sells a call but also buys the stock underlying the option, 100 shares for each call sold ...
Option strategies are the simultaneous, and often mixed, buying or selling of one or more options that differ in one or more of the options' variables. Call options , simply known as Calls, give the buyer a right to buy a particular stock at that option's strike price .
In summary, it is important to remember that a long calendar spread is a neutral – and in some instances a directional – trading strategy that is used when a trader expects a gradual or sideways movement in the short term and has more direction bias over the life of the longer-dated option. This trade is constructed by selling a short-dated ...
Risks of call and put options. Buying and selling call and put options does come with risk. Here are a few to be aware of: Have to be right about the stock’s direction: You have to correctly ...
Payoffs from a bull call spread A bull spread can be constructed using two call options. Often the call with the lower exercise price will be at-the-money while the call with the higher exercise price is out-of-the-money. Both calls must have the same underlying security and expiration month. If the bull call spread is done so that both the ...
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