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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 ...
Put option: A put option gives its buyer the right, but not the obligation, to sell a stock at the strike price prior to the expiration date. When you buy a call or put option, you pay a premium ...
Here are a few guides on the basics of call options and put options before we get started. ... traders can turn to several basic option trading strategies that have limited risk. So even risk ...
%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:
Call option – the right to buy an asset at a fixed date and price. Put option – the right to sell an asset at a fixed date and price. Foreign exchange option – the right to sell money in one currency and buy money in another currency at a fixed date and rate. Strike price – the asset price at which the investor can exercise an option.
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.
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