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Here’s the long and the short of it! Going long vs. going short. The distinction between going long and going short is brief but important: Being long a stock means that you own it and will ...
The appeal of buying call options is that they drastically magnify a trader’s profits, as compared to owning the stock directly. With the same initial investment of $200, a trader could buy 10 ...
The trader may also forecast how high the stock price may go and the time frame in which the rally may occur in order to select the optimum trading strategy for buying a bullish option. The most bullish of options trading strategies, used by most options traders, is simply buying a call option. The market is always moving.
A trader who expects a stock's price to increase can buy a call option to purchase the stock at a fixed price (strike price) at a later date, rather than purchase the stock outright. The cash outlay on the option is the premium. The trader would have no obligation to buy the stock, but only has the right to do so on or before the expiration date.
A long call ladder consists of buying a call at one strike price and selling a call at each of two higher strike prices, while a long put ladder consists of buying a put at one strike price and selling a put at each of two lower strike prices. [1] A short ladder is the opposite position, in which one option is sold and the other two are bought. [1]
If you owned a stock for more than a year, you’ll pay the long-term capital gains rate, which may be more or less than your short-term rate (and sometimes even at a 0 percent rate). Bottom line
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