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Options trading can be complex, and the trading jargon may confuse even experienced investors and traders. Two of the most common options contracts to understand are call and put options.
Investors can use options to hedge their portfolio against loss. Also, they can help buy a stock for less than its current market value and increase gains. Call vs put options are the two sides of ...
In the financial world, options come in one of two flavors: calls and puts. The basic way that calls and puts function is actually fairly simple. A call option is a contract giving you the right to...
The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves. Moderately bearish options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost.
For example, a bull spread constructed from calls (e.g., long a 50 call, short a 60 call) combined with a bear spread constructed from puts (e.g., long a 60 put, short a 50 put) has a constant payoff of the difference in exercise prices (e.g. 10) assuming that the underlying stock does not go ex-dividend before the expiration of the options.
The buyer of the call option has the right, but not the obligation, to buy an agreed quantity of a particular commodity or financial instrument (the underlying) from the seller of the option at or before a certain time (the expiration date) for a certain price (the strike price).