Long Call
An investor might use a long call option position when the share price or market is expected to rise.
A call option allows an investor to pay a fixed premium for the right, but not the obligation, to buy an asset at a predetermined price until expiration. The Long Call strategy might be useful for an investor who is bullish on either the market or the price of a specific stock. Investors going long calls may profit if the price of the underlying shares rises above the combined value of the strike price and the net cost of the option.
Watch our Traders' Academy video to find out more about Bull Market Long Calls.
Short Put
An investor might use a short put option position when the share price or market is expected to rise.
An investor selling a put option receives a fixed premium and gives another investor the right but not the obligation to sell an asset at a predetermined price until expiration. A Short Put strategy might be considered by a risk-tolerant trader with the opinion that a stock’s price is likely to increase and/or volatility is likely to decrease.
Watch our Traders' Academy video to find out more about Bull Market Short Puts.
Options involve risk and are not suitable for all investors. For more information read the “Characteristics and Risks of Standardized Options” that you can find on the OCC website.