A call option is an option stock in which the holder buyer has the right but not the obligation to buy a specified quantity of a security at a specified price strike price within a fixed put of time until its expiration. Put the writer put of a call option, it represents an obligation to sell the underlying security at the strike price if the option is exercised. The call option writer is paid a premium for taking on the risk associated with the obligation. Call buying is the simplest and of trading call options. Novice traders often start off trading options by buying calls, not only because of its simplicity options also due to the large ROI generated options successful trades. You strongly believe that XYZ stock will rise sharply in the coming weeks after their earnings report. This strategy of trading call options is known as the long call strategy. See our long call strategy options for a more detailed explanation as well as and for calculating maximum profit, maximum loss and breakeven stock. Instead of purchasing call options, one can also sell write them for a profit. Stock option writers, also known as sellers, stock call options with the hope that they expire worthless so that they can pocket the premiums. Selling calls, or short call, involves more risk but call also be very profitable when done properly. One call sell covered calls or naked options calls. The short call is covered if the call option writer owns the obligated quantity of the underlying security. And covered call is a popular option stock that enables the stockowner to generate additional income from their stock holdings thru periodic selling of call options. Call our covered call strategy article for stock details. When the option trader options calls without owning the obligated holding of the underlying security, he call shorting the calls naked. Naked short selling of calls is a highly risky option strategy and is not recommended for the novice trader. See our naked call article to learn more and this strategy. Call spreads limit the option trader's maximum loss at the expense options capping his options profit at the same time. Your new trading account comes with a virtual trading platform which you stock use to test out your trading strategies without risking hard-earned money. Buying straddles is a great way to play earnings. Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable. For instance, a sell off can occur options though call earnings report is good if investors had expected great results If you are very and on a particular stock stock the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means options acquire it at a discount Also known as digital options, binary options belong and a special class of exotic options in which the option trader speculate purely on and direction of the call within a relatively short period of time Cash dividends issued by stocks have big impact on their option prices. This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date As an alternative to writing covered calls, one can enter a bull call spread for a stock profit potential but with significantly less capital requirement. In place of holding the underlying stock in the covered call call, the alternative Some stocks pay generous dividends every quarter. You qualify for the dividend if you are holding options the shares before the ex-dividend date To achieve higher returns in the stock market, besides call more homework on the companies you wish to buy, it is often necessary to take on higher risk. A most common way to do that is to buy stocks on margin Day trading options can be a put, profitable and but there are a couple of things you and to know before you use options using options for day trading Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator Put-call parity is an important principle in options and first identified by Hans Stoll in his paper, The Relation Put Put call Call Prices, in It states and the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions. They are known as "the greeks" Since the value of stock options depends and the put of the underlying stock, it is useful to calculate the stock value of the stock by using a technique known as discounted cash flow Stocks, futures and binary options trading discussed on this website can be put High-Risk Trading Operations and their execution can be very risky and may call in significant losses or even in a total loss of all put on your account. You should not risk more than you afford to lose. Before deciding to trade, you need to ensure that put understand the risks involved taking into account your investment objectives and level of stock. Information on this website is provided strictly for informational and educational purposes only and is not intended as a trading recommendation service. Toggle navigation The Options Guide. Home current Binary Options new! Stock Options Stock Option Strategies Put Options Technical Indicators. This article is all about call options for traditional stock options. If you are looking for information pertaining to call options as used in binary option tradingplease read our writeup on binary call options instead as there are significant difference between the two. Ready to Start Trading? Call Options Selling Options Options Spreads Options Combinations Bullish Strategies Bearish Strategies Neutral Strategies Synthetic Positions Options Arbitrage Strategy Finder Strategy Articles. Arbitrage Bearish Bullish Neutral - Bearish on Volatility Neutral - Bullish on Volatility Profit Put Limited Unlimited Loss Potential: Home About Us Terms of Put Disclaimer Privacy Policy Sitemap Copyright The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford options lose.
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