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If the stock moves significantly, one of the options could lose a lot. Example: Stock ABC is $20, and a $20 put pays $1 and a $20 call pays $1. Creating this trade yields $2 upfront, or a total of ...
Short put. This options trading strategy is the flipside of the long put, but here the trader sells a put — referred to as “going short” a put — and expects the stock price to be above the ...
A covered call involves selling a call option on a stock that you already own. By owning the stock, you’re “covered” (i.e. protected) if the stock rises and the call option expires in the money.
The married put (also known as a protective put) is a bullish strategy and consists of the purchase of a long stock and a long put option. The married put has limited downside risk provided by the purchased put option and a potential return which is infinite. Calculations for the Married Put Strategy are: Net Debit = Stock Price + Put Ask Price
Triple witching hour is the last hour of the stock market trading session (3:00-4:00 P.M., New York City local Time) on the third Friday of every March, June, September, and December. Those days are the expiration of three kinds of securities: Stock market index futures; Stock market index options; Stock options.
Payoffs from a short put position, equivalent to that of a covered call Payoffs from a short call position, equivalent to that of a covered put. A covered option is a financial transaction in which the holder of securities sells (or "writes") a type of financial options contract known as a "call" or a "put" against stock that they own or are shorting.
The put backspread is a strategy in options trading whereby the options trader writes a number of put options at a higher strike price (often at-the-money) and buys a greater number (often twice as many) of put options at a lower strike price (often out-of-the-money) of the same underlying stock and expiration date. Typically the strikes are ...
The ability to trade 24 hours may help those with a clear read on the stock market, but long-term buy-and-hold investors may not find the extra hours all that necessary to invest.