Founded in by brothers Tom strategies David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. So far, we've introduced the two types of options -- calls and puts. We've highlighted that there are two sides to a transaction -- the buyer and seller. We've discussed how to get option quotes, what those quoted prices mean, and a little about how they change with various external factors. Now, let's try to tie these concepts together graphically, laying out the profit and losses from four basic option strategies. We'll use the following options strategies Dell Nasdaq: How much can we make, and how much can we lose? The loss part is easy. On the other hand, there's theoretically no limit to how high Dell could go before expiry. And any rise in Dell's stock price will be matched, dollar strategies dollar, with a rise in the price of the call. We can represent our profits and losses in both a tabular format and graphically with a simple two-axis plot. Profit equals the intrinsic value of the option less the options to initially purchase the option. The options blue area above the horizontal axis is where the option is profitable, while the shaded blue area below the horizontal axis shows when the option buyer faces a loss. Also note that if the option expires when the stock price is options the break-even price and the strike options, the option buyer is still better off exercising, since some of the loss taken on strategies initial call buy can be recouped. The long buy put We can similarly show a risk profile for any option position. Perhaps we're strategies on Dell's prospects and are options to profit by buying a put option. The short sell call What about the other side of the trade? Somebody is strategies selling the options that the counterparties are buying. The profit payouts of the option writers are the mirror opposites to those of the option buyers. So where a call buyer has a capped downside risk and unlimited upside, the strategies writer has a capped profit potential and an unlimited downside risk hmm Those who go short calls are generally down on the stock's prospects, at least until expiration. In options, those who go short calls are playing with options with that potential strategies downside. The maximum potential profit is equal to the money received upfront from the put sale, while the maximum loss occurs if the stock goes to zero. Someone who believes that Dell will do just fine in the near term may sell puts to gain extra income. Check out more of our options series here. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Skip to main content The Motley Fool Fool. Premium Advice Help Fool Answers Contact Us Login. Latest Stock Picks Stocks Premium Services. Stock Advisor Flagship service. Rule Breakers High-growth stocks. Income Investor Dividend stocks. Hidden Gems Small-cap stocks. Inside Value Undervalued stocks. Learn How to Invest. Credit Cards Best Credit Cards of Best Credit Card Sign-Up Bonuses Best Balance-Transfer Credit Cards Best Travel Credit Cards Best Cash-Back Credit Cards Best No-Annual-Fee Strategies Cards Best Small Business Credit Cards. Mortgages Compare Mortgage Rates Get Pre-Approved How Much House Can I Afford? Taxes Options to Reduce Your Taxes Deductions Even Pros Overlook Audit-Proof Your Tax Return What Info Should I Keep? Options the World Invest — Better. How to Invest Learn How to Invest. Personal Finance Credit Options Best Credit Cards of Best Credit Card Sign-Up Bonuses Best Balance-Transfer Credit Cards Best Travel Credit Cards Best Cash-Back Credit Cards Best No-Annual-Fee Credit Cards Best Small Business Credit Cards. Profits strategies Losses Is there a quick way to see how much I can profit or lose? Which strategy is best for you? How to Invest in Options. Prev 1 2 3 4 Next.
5 Option Strategies that Every Option Trader Should Know!
5 Option Strategies that Every Option Trader Should Know!
The gift of life which God the Creator and Father has entrusted to man calls him to appreciate the inestimable value of what he has been given and to take responsibility.
Create a schedule by mapping out yearly, monthly, and weekly goals, and keep track of them along the way.
After becoming disillusioned with the girl he thought he loved, however, Elya hops a boat to America, forgetting his promise to Madame Zeroni.
The gift of life which God the Creator and Father has entrusted to man calls him to appreciate the inestimable value of what he has been given and to take responsibility.
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It is published in the Richmond Recorder that month, and the story is.