Options for a New Trader
08/07/2015 8:00 am EST
In this video, options expert Seth Freudberg, of SMB Options Training Program, offers a question-and-answer between him and one of fellow options trader Mike Bellafiore's students regarding buying and selling call options versus puts, citing a real world example for support.
In this video, you will learn:
- Buying a call option gives you the right to buy shares at a certain price (the strike price) by a certain date.
- Buying a put option gives you the right to sell shares you own at a certain price (again the strike price) by a certain date.
- Selling a call or put is the other side of the transaction; you become the one obligated to sell the shares at the call buyer’s strike price and you become the one obligated to buy the shares at the put buyer’s strike price.
- When you buy an option you buy a right that you may or may not ever exercise. When you sell an option, you are undertaking an obligation that you may or may not ever be called upon to fulfill. It all depends on the market…
By Seth Freudberg, Director, SMB Options Training Program