Long a call option and short a put option expiration


Long a call option and short a put option expiration


The option itself is a security in its own right, as it can be purchased and sold. When you have a long position on any security, you want that security price to go up. DescriptionAn investor writes a call option and buys a put option with the same expiration as a means to hedge a long position in the underlying stock. This strategy combines two other hedging strategies: protective puts and covered call writing.Usually, the investor will select a call strike above and a long put strike below the starting stock price.

There is latitude, but the strike choices will affect the cost of the hedge as well as the protection it provides. A long put option could also be used to hedge a long stock position. For the employee incentive, see Employee stock option. The strike price may be set by reference to the spot price (market price) of the underlying security or commodity on the day an option is taken llong, or it may be fixed at a discount or at a premium.

The seller has the corresponding obligation to fuThe long call option strategy is the most basic option trading strategy whereby the options trader buy call options with the belief that the price of theunderlying security will rise significantly beyond the strike price before the option expiration date. Long Lonng ConstructionBuy 1 ATM CallLeverageCompared to buying the underlying shares outright, the call option buyer is ableto gain leverage since the lower priced calls appreciate in value faster percentagewisefor every point rise in the price of the underlying stockHowever, call options have a limited lifespan.

If the underlying stock price does not move above the strike price before the optin expiration date, the call option will expire worthless. Plus you w.




Long a call option and short a put option expiration

A long option call expiration option a and short put

Long a call option and short a put option expiration



Add a comment

Your e-mail will not be published. Required fields are marked *

« Previous records « Next records