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Options trading can be complex, and the trading jargon may confuse even experienced investors and traders. Two of the most common options contracts to understand are call and put options.
In the financial world, options come in one of two flavors: calls and puts. The basic way that calls and puts function is actually fairly simple. A call option is a contract giving you the right to...
Investors can use options to hedge their portfolio against loss. Also, they can help buy a stock for less than its current market value and increase gains. Call vs put options are the two sides of ...
The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves. Moderately bearish options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost.
Payoffs of short strangle. A strangle [note 1], requires the investor to simultaneously buy or sell both a call and a put option on the same underlying security.The strike price for the call and put contracts are usually, respectively, above and below the current price of the underlying.
short a call, long a put, and; long the underlying; The call and put have the same strike value and expiration date. The resulting portfolio is delta neutral. One reason a trader may take this position would be to extend the holding period of the underlying position for capital gains tax purposes, while locking in the current price.
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