Tuesday, November 21, 2023

easy option terminology

In the stock market, you can 

* short a call(1)      meaning : be forced(5) to sell tomorrow(2), if price goes up (3)

* short a put           meaning : be forced to buy tomorrow, if price goes down

similarly, you can 

* long a call(4)      meaning : be forced to buy tomorrow, if price goes up

* long a put           meaning : be forced to buy tomorrow, if price goes down

other than these, you can also do plain-vanilla things, like

* buy today
* sell today

like the basic prole you are

Footnotes

1 - sell a Call option as opposed to 4

2 - not really tomorrow , but on option expiry date, which is the last <some>day of the month

3 - beyond the strike price in the unprofitable direction, here up

4 - buy a Call option

5 - in Indian stock markets, options in the money are not optional, and are settled delivery based. Yes

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