Question

Please explain the concepts with examples of Long Call, Short call and Long Put, Short put.
What are the differences between them.

Answer 1

Long Call:

Long call option strategy is the most basic option trading strategy whereby the option trader buy call options with the brief that the price of the underling security will rise significantly beyond the sticke price before the option expriation date.

Short Call:

A short call means the sale of a call option, which is a contract that gives the holder the right, but not that obligation to buy a stock, bond, currency or commodity at a given price.

Long Put:

A long put is an option strategy in which a put option is purchased as a speculative play on a down term in the price underlying equity or index.

Short Put:

A bullish option strategy that involves selling shop or writing a put option. when the stock rises above the strike price of the short put by the expiration, the put option expires worthless and entire premium from its sale is earned.

Differences between CALL and PUT Options:

An option holder will excercise his option only when it is advantage to excercise it based on the strike price and market price on the date of expire.

A Call Option gives the buyer the right but not the obligation to buy the underlying security at the exercise price. A Put Option gives the buyer the right but not the obligation to sell the underlying security at the exercise price.