Author Archives: Bavan Arumugam

Covered Put

A covered put is an options insurance strategy where you simultaneously have a short open position on a stock and sell a put option for the same underlying option. This means you’re shorting a stock, but give someone else the right to sell you that stock at certain price in the future. You would use this if you were certain a stock’s price wasn’t going to go up, but you weren’t sure if would go down either – so you make a bit more money if the price doesn’t change.

Covered Call

A covered call is an options insurance strategy where you simultaneously own a stock and sell a call option for the same symbol (usually for a higher price than what you paid for it). This gives someone else the right (but not obligation) to buy your stock from you later at a specific price. If the underlying stock’s price goes up, the buyer will exercise the option and buy the shares. If the price goes down, the seller of the option keeps both the stocks and the price of the options.

Long Call

A long call is a term used when you own a call option for an underlying asset. A call option is a contract where the buyer has the right (not the obligation) to exercise a buy transaction at a specific strike price at or before an expiration date. In the world of trading, owing a long call means that you have a contract that gives you the right to buy the underlying asset at a specific price, before a maturity date.

Short Call

A short call is a term used when you sell a call option for an underlying asset. If you use this type of option, you’re selling someone else the right to buy a stock from you at a certain price in the future. If the stock’s price goes down, you keep the money you made by selling the option. If the stock’s price goes up, you are required to sell the stock at the agreed upon price, taking a loss.

Long Put

A long put is a term used when you own a put option for an underlying asset. A put option is a contract where the buyer of the put has the right (not the obligation) to exercise a sell transaction at a specific strike price before an expiration date. In the world of trading, owning a long put means that you have a contract that gives you the right to sell the underlying asset at a specific price, before a maturity date.

Short Put

A “short put” is selling a put option on an underlying asset. Short Puts are used by an investor who thinks a stock’s price is not going to go down. For example, with this type of trade, you would sell a Put option to someone else – giving them the right to sell a stock to you at the price you agreed on. If the price of that stock goes above that price, you keep the price of the option. If the price goes down, you’ll be required to buy the underlying stock at the Put price.

What Is A Short Call?

A short call means you sell someone the right to buy a specific stock from you in the future at a certain price. If the stock’s price goes down, they won’t exercise their option, so your profit is the price you sold the contract for.