Showing posts with the label 4-types-of-options


TYPES OF BUY SELL IN OPTION    Having reviewed the basics of option characteristics, we are now aware that we have a number of investment choices: stock, calls on the stock, and puts on the stock. For each of these, we can initiate a position either by purchase (referred to as a long position) or by sale (referred to as a short position), thus giving us six different initiating strategies : * Long stock * Short stock   * Long call   * Short call   * Long put   * Short put These tools are what we can use to construct all option-based strategies. By combining these building blocks, the individual investor can create strategies ranging from basic to complex. Mastery of each of the individual building blocks is essential for understanding how they work in combination. Therefore, we will now look at each of these six alternatives in some detail. Retail investors are already familiar with one of these building blocks: long stock. With an understanding of the oth