␡
- 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
- Chapter 1 Major Learning Points
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 will be upward from left to right.
Where you end up with a - risk profile, the diagonal line will be downward from left to right.