In our SMBU Daily Video, learn some basic concepts in options trading.
In this video from Seth Freudberg, 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…
We hope this video helps you improve your trading skills.
– SMBU Team
* no relevant positions