FRENZ HUB LIFESTYLE
Options are a type of derivatives contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a set price on or before a certain date.
Options are a popular investment vehicle among more experienced traders because there is an opportunity to make money.
When you buy a call option, you gain the right to purchase shares of a stock at the strike price before the expiration date.
Covered calls are the other side of the call option transaction. A covered call is when an investor owns underlying security and then sells call options on them.
If you’re unsure whether a stock will go up or down, but you’re convinced that it will experience a lot of short-term movement, employ the long straddle option trading strategy.
The term “long” can be confusing in this context, but it just refers to the act of the trader buying an option and hoping to profit from it in the future.
Similar to a covered call, a short put is the other side of the transaction for long puts. The main difference is the level of risk.
Traders still long on a stock or security but want to protect their downside may consider protective puts.