Trading calls and puts options


More video on topic «Trading calls and puts options»

Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.

Using Covered Calls and Covered Puts to Manage Risk

This is because minor fluctuations in the price of the stock can have a major impact on the price of an option. So if the value of an option increases sufficiently, it often makes sense to sell it for a quick profit.

How do Stock Options Work? Puts, Calls, and Stock Option

As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement. In place of holding the underlying stock in the covered call strategy, the alternative.. [Read on.]

Options come in two flavors—puts and calls. A call is the right to buy a stock for a given price within a given period of time, while a put is the right to sell a stock for a given price within a given period of time.

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The price at which the option can be exercised— in other words, the price at which the stock may be bought or sold—is known as the strike price. And the time at which the option expires is known as the expiration date.

Any performance results of our recommendations prepared by Stansberry Research are not based on actual trading of securities but are instead based on a hypothetical trading account. Hypothetical performance results have many inherent limitations. Your actual results may vary.

Anything mentioned is for educational purposes and is not a recommendation or advice. The Options Playbook Radio is brought to you by TradeKing Group, Inc.

When to Buy and Sell
One of the most important decisions to make is when you should sell calls and buy puts. Is the best time to be selling just prior to earnings announcements when the premiums are pumped up or is the week after the earnings are announced the best time to buy puts? And should you consider the implied volatilities of the options hoping to sell overpriced calls and buy underpriced puts? Often, recently pumped up volatilities imply that something may be in the works and some people are trading on inside information. Perhaps not hedging all the positions at one time is the more prudent approach.

Once the average investor has reached a comfort level trading stocks, then he should begin learning about put and call options and how to trade them. Then, once he understands the basics and how to trade them successfully, then he should implement them in his regular trading and portfolio management strategy and watch his profits increase.


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