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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 long call is the purchase of a call option. A long call offers the right, but not the obligation, to purchase a stock (or other asset) at a specific price by a specific date, at which point the ...
Put protects downside while call premium offsets cost of buying put. Gains capped if shares called away. Loss of dividends from assignments. Long Straddles. Speculation. Buying call and put ...
A short call ladder is also called a bear call ladder. [7] A long put ladder is also called a bear put ladder. [8] A short put ladder is also called a bull put ladder. [9] A ladder can be seen as a modification of a bull spread or a bear spread with an additional option: for instance, a bear call ladder is equivalent to a bear call spread with ...
For example, a bull spread constructed from calls (e.g., long a 50 call, short a 60 call) combined with a bear spread constructed from puts (e.g., long a 60 put, short a 50 put) has a constant payoff of the difference in exercise prices (e.g. 10) assuming that the underlying stock does not go ex-dividend before the expiration of the options.
Guts - buy (long gut) or sell (short gut) a pair of ITM (in the money) put and call (compared to a strangle where OTM puts and calls are traded). Butterfly - a neutral option strategy combining bull and bear spreads. Long butterfly spreads use four option contracts with the same expiration but three different strike prices to create a range of ...
Call options vs. put options The other major kind of option is called a put option, and its value increases as the stock price goes down. So traders can wager on a stock’s decline by buying put ...
%If Unchanged Potential Return = (call option price - put option price) / [stock price - (call option price - put option price)] For example, for stock JKH purchased at $52.5, a call option sold for $2.00 with a strike price of $55 and a put option purchased for $0.50 with a strike price of $50, the %If Unchanged Return for the collar would be:
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