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- Criteria for Successful Investing
- Risk Profile Charts
- The Definition of an Option
- The Valuation of Options
- Intrinsic and Time Value for Calls
- Intrinsic and Time Value for Puts
- The Seven Factors that Influence an Option's Premium
- Risk Profile Charts for Call Options
- Risk Profile Charts for Put Options
- Memory Tips for Long and Short Calls and Puts
- Basic Risk Profiles Summary
- Notation Standard for the Examples
- Chapter 1 Major Learning Points
This chapter is from the book
This chapter is from the book
This chapter is from the book
This chapter is from the book
Memory Tips for Long and Short Calls and Puts
Step 1 • Remember your basic math at school:
+ + = + + – = – – + = – – – = +
Step 2 • Think buying something as a + and selling something as a –; therefore:
Buying a call would be a + +
Selling a call would be a – +
Buying a put would be a + –
Selling a put would be a – –
Step 3 • Remember your risk profiles:
Where you end up with a + risk profile, the diagonal line is upward from left to right.
Where you end up with a – risk profile, the diagonal line is downward from left to right.
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