Trading: Difference between revisions
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Close = the end of the option (you will execute the option you previously purchased) | Close = the end of the option (you will execute the option you previously purchased) | ||
I am mostly interested in using options to short a stock with reduced risk. Directly shorting a stock means that you may have to buy it later at whatever the market value is, which is potentially unlimited. But | I am mostly interested in using options to short a stock with reduced risk. Directly shorting a stock means that you may have to buy it later at whatever the market value is, which is potentially unlimited. But options may offer a safer way. Naked calls? Need to research... | ||
Latest revision as of 15:36, 20 September 2020
Ths page describes the important trading terms, concepts and strategies that I know and try to use in personally, as well as automate via A better Trader.
Options
You have to study options terminology carefully before you can even understand them.
Options give you the option (the right but not obligation) to perform a trade in the future at a specific price.
Call = right to buy Put = right to sell
Open = the start of the option (you will pay a "premium" to have the option to trade in the future) Close = the end of the option (you will execute the option you previously purchased)
I am mostly interested in using options to short a stock with reduced risk. Directly shorting a stock means that you may have to buy it later at whatever the market value is, which is potentially unlimited. But options may offer a safer way. Naked calls? Need to research...