Call options are a type of option that increases in value when a stock rises. They allow the owner to lock in a price to buy a specific stock by a specific date. Call options are appealing because they can appreciate quickly on a small move up in the sto
A naked call option is when an option seller sells a call option without owning the underlying stock. Naked short selling of options is considered very risky since there is no limit to how high a stock’s price can go and the option seller is not “covered” against potential losses by o...
selling it. While gains from call and put options are also taxable, their treatment by the IRS is more complex because of the multiple types and varieties of options. In the case above, the only cost to the shareholder for engaging in this strategy is the cost of the options contract ...
or giving someone else the right to buy the stock. The investor collects the option premium and hopes the option expires worthless (below strike price). This strategy generates additional income for the investor but can
Selling covered calls is a strategy that can help traders potentially make money if the stock price doesn't move. Learn how this strategy works.
If you’re bullish on a stock, you might use a short call options trading strategy to help limit your downside risk. By selling a call option, you give the buyer the right to purchase shares of the underlying stock at a set price (the strike price) on or before a certain date (the...
For example, a short strangle options strategy involves selling a call option with a strike price above the current share price and selling a put option with a strike price under the current share price.2 So if XYZ is trading at $50, Jane can sell a call with a $55 strike price and...
selling it. While gains from call and put options are also taxable, their treatment by the IRS is more complex because of the multiple types and varieties of options. In the case above, the only cost to the shareholder for engaging in this strategy is the cost of the options contract ...
Books about option trading have always presented the popular strategy known as thecovered-callwrite as standard fare. But there is another version of the covered-call write that you may not know about. It involves writing (selling)in-the-moneycovered calls, and it offerstraderstwo major advantag...
the strategy will still profit, but not as much as in the scenario above. The long call option increases in value, but the short call option also starts to gain in value, which reduces the overall profit.