: The predetermined price at which the stock can be bought or sold.
When you buy an option, you have the , but not the obligation , to trade the stock. Long Call (Bullish) Goal : You expect the stock price to rise . Right : You can buy the stock at the strike price. Risk : Limited to the premium paid. buying and selling calls and puts
The Complete Guide to Buying and Selling Calls and Puts Options trading provides flexibility beyond simple stock ownership, allowing you to profit from upward, downward, and even sideways market movements. This guide breaks down the four essential moves every trader must master: buying calls, buying puts, selling calls, and selling puts. 1. The Core Building Blocks : The predetermined price at which the stock
: Realized if the stock price drops below the strike price minus the premium paid. 3. Selling Options (Writing "Short") Right : You can buy the stock at the strike price
Before placing a trade, you need to understand the basic mechanics: