What Is Option Trading? 2022 - Valiant Markets

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OPTION INVESTMENT STRATEGIES Presentation by

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WHAT IS OPTION? Depending on the kind of option, an agreement known as an option gives its owner, the holder, the right—but not the obligation—to purchase or sell an underlying asset or instrument at a defined strike price on or before a stated date.

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TWO TYPES OF OPTION TRADING

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CALL VS. PUT OPTIONS The two forms of options contracts available for stocks and other assets are call options and put options.

You get the right to purchase the underlying asset at a specific price in the future when you buy a call option.

The contract must be executed before the expiration date. In contrast, a put option is when you buy the right to sell the underlying asset up to the expiration date for a specific price.

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OPTION TRADING STRATEGIES Covered Call Married Put Bull Call Spread Bear Put Spread Protective Collar Long Straddle

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BUY THE STOCK OF A LISTED COMPANY Profit

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Price (S)

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Types of option Contract

Call Option

Put Option

In the Money

Spot Price > Strike Price

Spot Price < Strike Price

At the Money

Spot Price = Strike Price

Spot Price = Strike Price

Out of the Money

Spot Price < Strike Price

Spot Price > Strike Price

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