Buying And Selling Calls And Puts Official

When you buy an option, you have the , but not the obligation , to trade the stock. Long Call (Bullish) Goal : You expect the stock price to rise . Right : You can buy the stock at the strike price. Risk : Limited to the premium paid.

: One standard equity option contract typically controls 100 shares of the underlying stock. buying and selling calls and puts

: Realized if the stock price drops below the strike price minus the premium paid. 3. Selling Options (Writing "Short") When you buy an option, you have the

: Realized if the stock price moves above the strike price plus the premium paid. Long Put (Bearish) Goal : You expect the stock price to fall . Right : You can sell the stock at the strike price. Risk : Limited to the premium paid. Risk : Limited to the premium paid

: The predetermined price at which the stock can be bought or sold.