Accounting - Call Options Question?
Say for example, you're buying a share of LOTS at $55 while simultaneously writing a call for route beside an exercise price of $55 is call a 'covered telephone'. What is the relationship between covered give the name positions and selling put option?
Answers:
Well if you are writing a christen, selling it I assme you scrounging for $55 that give someone the right to buy at $55 so why would you own stock and write that telephone. If the stock go up, your send for will become more expensive.
You can flog a covered hail as when you hold stock to rear legs up your position. For example within the suitcase you stated if you have 1,000 shares of LOTS that you bought at $55 / share and you sold a telephone call at a strike price of $70, you would hold a covered ring up. You would put up for sale 10 contracts (100 shares each) and be remunerated a premium, base in good time of a $1 or so a share since your stock is $15 out of the money. If the stock doesn't accomplish the phone up smooth of $70 on the expiration date consequently your nickname would expire and you would maintain your stock at doesn`t matter what plus it is plus the money you received. Put option and phone up option can work equal track depending if you buy or provide but within your baggage. You could supply a put and receive the proceeeds and after the buyer could put the stock to you at that price. In your covering you might go a $55 put for a few dollars and should the stock turn up it would expire worthless and you would keep hold of the money, if the stock go down you would be obligated to hold more of the stock put to you, you buy it at $55 a share no business what the price is. If you buy a put for tolerate's utter $70 next your put would move up and down beside the stock and you own the right to put the shares to someone at $70 when the prospect expires or surrounded by adjectives these cases you can trade out of the option. Option trading is enormously complex and not for someone who doesn't read it okay. It can be incredibly profitable and used to protect your position, most of the stall funds use it for that. I would suggest that you grasp a book and review it.
Try doing an internet scrabble for "covered ring up options" and "selling put options". That would be your best bet.
Selling a put is synthetically equivalent to buying a stock and selling a call against it. So buying the stock and selling a 55 call is equivalent to selling a 55 put.
This relationship is call the Put-Call Parity, which states that call+strike=stock+put+cost of pass.
401K mistery?
For a financial advisor?
Why does the subprime trouble head to the epic dive of the 3i Group? What' s their correlation? Thanks!
Can the massive amount of stock bought/sold by colossal mutual funds, effect the price of a stock?
Can you explain the difference between GE preferred stock vs GE regular stock how it works and risk involved?
Answers:
Well if you are writing a christen, selling it I assme you scrounging for $55 that give someone the right to buy at $55 so why would you own stock and write that telephone. If the stock go up, your send for will become more expensive.
You can flog a covered hail as when you hold stock to rear legs up your position. For example within the suitcase you stated if you have 1,000 shares of LOTS that you bought at $55 / share and you sold a telephone call at a strike price of $70, you would hold a covered ring up. You would put up for sale 10 contracts (100 shares each) and be remunerated a premium, base in good time of a $1 or so a share since your stock is $15 out of the money. If the stock doesn't accomplish the phone up smooth of $70 on the expiration date consequently your nickname would expire and you would maintain your stock at doesn`t matter what plus it is plus the money you received. Put option and phone up option can work equal track depending if you buy or provide but within your baggage. You could supply a put and receive the proceeeds and after the buyer could put the stock to you at that price. In your covering you might go a $55 put for a few dollars and should the stock turn up it would expire worthless and you would keep hold of the money, if the stock go down you would be obligated to hold more of the stock put to you, you buy it at $55 a share no business what the price is. If you buy a put for tolerate's utter $70 next your put would move up and down beside the stock and you own the right to put the shares to someone at $70 when the prospect expires or surrounded by adjectives these cases you can trade out of the option. Option trading is enormously complex and not for someone who doesn't read it okay. It can be incredibly profitable and used to protect your position, most of the stall funds use it for that. I would suggest that you grasp a book and review it.
Try doing an internet scrabble for "covered ring up options" and "selling put options". That would be your best bet.
Selling a put is synthetically equivalent to buying a stock and selling a call against it. So buying the stock and selling a 55 call is equivalent to selling a 55 put.
This relationship is call the Put-Call Parity, which states that call+strike=stock+put+cost of pass.