General
Darren Krett
Friday 10 February 2023
WHY OPTIONS?
Options limit risk a. An option gives the holder a risk-limiting position in the underlying. b. Because they limit risk, they provide symmet
WHY OPTIONS?
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CALL OPTIONS
Stay ahead and keep your mind focused.
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Learning
Option Strategies
The simple textbook definition is a buyer of a Call option has the right (but not the obligation) to buy a specified quantity of a security at a specified price (strike price) within a fixed period of time (expiration date).
In theory, outright call buying has unlimited upside with limited downside. I say “unlimited in theory” because securities do not go to infinity, but it can sure feel that way if you sold calls and the market is rallying.
The downside of a call buyer is limited to the price they paid for that call, commonly called the Premium. A seller of a Call has the exact opposite risk profile as the buyer. The seller collects the premium paid for the Call, but also has that unlimited downside.
Below is a Profit & loss graph (you will see this a lot in the coming chapters /pages).
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Learning
Tyler Krett
Wednesday 14 December 2022
Long Straddle
The Setup Buy a call, strike price A Buy a put, strike price A Generally, the stock price will be at strike A A long straddle is the best of
Long Straddle
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