Stock option calls and puts
Because the price of options can change very quickly and dramatically, you must continually watch their price movement. In a day, one of the most successful hedge funds in America was wiped out. Alternative Actions for the Put Buyer. He had to mortgage his house.
Therefore, if your stock gets called away, you have the shares in your account. If you get called, you must buy the stock at its current market value to cover the call even when the market price is higher than the strike price of the option. If you own a stock, you may buy a put as a form of insurance. Buying puts is a more conservative way of stock option calls and puts on a stock declining in price.
Alternative Actions for the Call Seller. Sell shares at the strike price to the call buyer if the call buyer exercises the call option. Alternative Actions for the Call Buyer. The seller collects the purchase price of the option but has the obligation to sell shares of the stock if the buyer decides to exercise the option.
With a put option your only liability is the price you paid for the put. So if the put buyer decides to exercise the put contract, the seller of the put has to buy the shares at the strike price no matter the current market value of the stock. If the stock continues to stock option calls and puts in price after the stock is sold, the seller looses the future price gain.
In most cases you must own shares of the stock for each contract you sell - this is called a covered call. Can already own them or buy them at market price, which is less than strike price. Alternative Actions for the Put Seller.
He ran through a hundred and thirty million dollars - his cash reserves, his savings, his other stocks-and when his broker came and asked for still more he didn't have it. Exercise call option if the stock price rises above the strike price. Therefore, if your stock gets called away, stock option calls and puts have the shares in your account. It tells about a trader who sold naked puts and experienced financial ruin.
As with a call option, you don't have to own the stock. The price that you pay for a call option depends on many factors two of which include: Buying puts is a more conservative way of betting on a stock declining in price.
Put buyer must own shares to sell. You can sell covered calls to generate a stream of income. Do not sell "naked" options. If the seller does not have money to stock option calls and puts the stock, the put option is naked. Buy shares at strike price, which is less than market price buy stock for less than it's worth.
Alternative Actions for the Put Buyer. You may be inviting a financial disaster. The price that you pay for a call option depends on many factors two of which include: If the stock falls in price, the put rises in price and helps offset the paper decline in the underlying stock. Buying puts is a more conservative way of betting stock option calls and puts a stock declining in price.
A put option is a contract that gives you the right, but not the obligation, to sell a stock at a preset price. Like gambling you can make or lose money very quickly. If the value of the stock goes down, the price of the option goes down, and you could hold it or sell it at a loss. What the put stock option calls and puts must do.