Option Styles
Options come in different styles, which dictate when they can be exercised:
American Options
Can be exercised anytime before expiration.
European Options
Can be exercised only on the expiration date.
How Option Trading Works
Buying vs Selling Options
Buying an option: You pay the premium for the right to buy/sell.
Selling an option (writing an option): You collect the premium but take the obligation if the buyer exercises it.
Exercising Options
Exercising is when the holder uses their right to buy or sell at the strike price.
Options in the Secondary Market
Options can also be traded without exercising. Traders can buy and sell options in the market to profit from changes in premiums.
Hedging and Speculation with Options
Options are used both for hedging (reducing risk) and speculation (betting on price movement). For example:
Hedging: Buying put options to protect a stock portfolio.
Speculation: Buying call options to profit from anticipated upward movement.
Options come in different styles, which dictate when they can be exercised:
American Options
Can be exercised anytime before expiration.
European Options
Can be exercised only on the expiration date.
How Option Trading Works
Buying vs Selling Options
Buying an option: You pay the premium for the right to buy/sell.
Selling an option (writing an option): You collect the premium but take the obligation if the buyer exercises it.
Exercising Options
Exercising is when the holder uses their right to buy or sell at the strike price.
Options in the Secondary Market
Options can also be traded without exercising. Traders can buy and sell options in the market to profit from changes in premiums.
Hedging and Speculation with Options
Options are used both for hedging (reducing risk) and speculation (betting on price movement). For example:
Hedging: Buying put options to protect a stock portfolio.
Speculation: Buying call options to profit from anticipated upward movement.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.