Explaining put and call options
Options are very sensitive to changes in the price of the underlying stocks. A put option goes up in price when the price of the underlying stock explaining put and call options down. If the stock falls in price, the put rises in price and helps offset the paper decline in the underlying stock.
Because the price explaining put and call options options can change very quickly and dramatically, you must continually watch their price movement. Can already own them or buy them at market price, which is less than strike price. What the put seller must do. If the seller gets called - he must sell the stock. This practice lets you sell calls when you don't own the stock.
Niederhoffer was forced to shut down his firm. What the put seller must do. If the put seller already has money in his account to buy the stock, the put option is covered. He explaining put and call options to mortgage his house. If your broker lets you, you may sell "uncovered "or "naked" calls in a margin account.
If you own a stock, you may buy a put as a form of insurance. A put option goes up in price when the price of the underlying explaining put and call options goes down. He had to borrow money from his children. Selling a put places the money you receive explaining put and call options a margin account so you pay interest on the proceeds until the put contract is closed. A call is a contract that gives the owner the right, but not the obligation, to buy shares of a stock at a fixed price, called the strike price, on or before the options expiration date.
Use calls and puts judiciously. Explaining put and call options a put option your only liability is the price you paid for the put. Alternative Actions for the Call Seller. Sell shares at strike price, which is more than market price sell stock for more than it's worth. Sell shares at the strike price to the call buyer if the call buyer exercises the call option.
In most cases you must own shares of the stock for each contract you sell - this is called a covered call. Can already own them or buy them at market price, which is less than strike price. He had to borrow money from his children. Also, the proceeds from selling short are in a margin account so you have to pay interest and meet margin requirements.
And you don't have to own the stock to profit from the price rise of the stock. Like gambling you can make or lose money very quickly. Knowledgeable, experienced investors may want to sell covered calls and puts to collect other peoples money.