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Being short a stock means that you have a negative position in the stock and will profit if the stock falls. Being long a stock is straightforward: You purchase shares in the company and you’re ...
You may look at short-term price movements, even watching the charts by the minute to predict the best time to buy or sell, and you’re “timing the market.” Stock prices drive your behavior ...
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.
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 ...
A hedge fund might sell short one automobile industry stock, while buying another—for example, short $1 million of DaimlerChrysler, long $1 million of Ford.With this position, any event that causes all auto industry stocks to fall will cause a profit on the DaimlerChrysler position and a matching loss on the Ford position.
A long ladder is similar to a short strangle but with limited risk in one direction (the downside for a call ladder and the upside for a put ladder), [1] while a short ladder is similar to a long strangle but with limited profit potential in one direction (again, the downside for a call ladder and the upside for a put ladder). [1]
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