A -G Archives - PersonalFinanceLab Financial Literacy Gamified Wed, 11 Sep 2019 19:22:33 +0000 en-US hourly 1 https://wordpress.org/?v=6.8.1 https://www.personalfinancelab.com/wp-content/uploads/favicon-50x50.png A -G Archives - PersonalFinanceLab 32 32 Butterfly Spreads https://www.personalfinancelab.com/faq/options-trading/butterfly-spreads/ Wed, 27 Dec 2017 17:44:28 +0000 http://content.personalfinancelab.com/?p=18033 A butterfly is a volatility bet that the trader can implement to protect against large fluctuations, or to gain on volatility.

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Collar Spreads https://www.personalfinancelab.com/faq/options-trading/collar-spreads/ Wed, 27 Dec 2017 17:28:17 +0000 http://content.personalfinancelab.com/?p=18024 A bullish collar is a protection strategy where you simultaneously buy a call at strike price 1 and sell a put at strike price 2. This strategy is for investors who has a bullish perception on the underlying asset. We can also create a “bearish” collar by simultaneously buying a put at strike price 1 and selling a call at strike price 2.

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Box Spreads https://www.personalfinancelab.com/security-types/options/box-spreads/ Wed, 27 Dec 2017 17:18:02 +0000 http://content.personalfinancelab.com/?p=18018 A box spread is an option strategy that is created by combining the components of the bull spread and the bear spread. In theory, a box spread should always have a zero profit and zero loss, but some investors use them if they see that current options prices aren't fully "priced in". In many cases, the commissions charged for the trades needed for this spread will be greater than the profit.

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Bear Spread https://www.personalfinancelab.com/faq/options-trading/bear-spread/ Wed, 27 Dec 2017 17:10:58 +0000 http://content.personalfinancelab.com/?p=18015 A bear spread is a strategy where you simultaneously buy a call option at Strike Price 1 (some amount higher than the current market rate), and sell a call option at Strike Price 2 (some amount lower than the current market right). This is used if the trader thinks the price of the stock will go down, but not by much. It limits both the risk and reward.

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Bull Spreads https://www.personalfinancelab.com/faq/options-trading/bull-spreads/ Wed, 27 Dec 2017 17:06:22 +0000 http://content.personalfinancelab.com/?p=18012 A bull spread is a strategy where you simultaneously buy a long call at Strike Price 1, and sell a call for Strike Price 2 (some higher amount). Use this strategy if you think that a stock's price will go up above your Point 1, but not as high as your Point 2.

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Cap https://www.personalfinancelab.com/faq/options-trading/cap/ Wed, 27 Dec 2017 16:52:51 +0000 http://content.personalfinancelab.com/?p=18009 A cap is an options protection strategy where you simultaneously have a short position on a stock and a long call for the same underlying asset. Adding a long call to your open position means that you have the right to cover your short at the strike price.

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Floor https://www.personalfinancelab.com/security-types/options/floor/ Wed, 27 Dec 2017 16:48:13 +0000 http://content.personalfinancelab.com/?p=18006 A floor is an options insurance strategy where you simultaneously have a long open position on a stock and a long put for the same underlying asset. Adding a long put to your open position means that if the stock's price starts to fall, you still have the right to sell it off at the price specified by your option.

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Covered Put https://www.personalfinancelab.com/faq/options-trading/covered-put/ Wed, 27 Dec 2017 16:41:00 +0000 http://content.personalfinancelab.com/?p=18002 A covered put is an options insurance strategy where you simultaneously have a short open position on a stock and sell a put option for the same underlying option. This means you're shorting a stock, but give someone else the right to sell you that stock at certain price in the future. You would use this if you were certain a stock's price wasn't going to go up, but you weren't sure if would go down either - so you make a bit more money if the price doesn't change.

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Covered Call https://www.personalfinancelab.com/faq/options-trading/covered-call/ Wed, 27 Dec 2017 16:35:01 +0000 http://content.personalfinancelab.com/?p=17999 A covered call is an options insurance strategy where you simultaneously own a stock and sell a call option for the same symbol (usually for a higher price than what you paid for it). This gives someone else the right (but not obligation) to buy your stock from you later at a specific price. If the underlying stock's price goes up, the buyer will exercise the option and buy the shares. If the price goes down, the seller of the option keeps both the stocks and the price of the options.

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What Is A Short Call? https://www.personalfinancelab.com/glossary/a-g/what-is-a-short-call/ Thu, 31 Aug 2017 16:01:31 +0000 http://content.personalfinancelab.com/?p=17258 A short call means you sell someone the right to buy a specific stock from you in the future at a certain price. If the stock's price goes down, they won't exercise their option, so your profit is the price you sold the contract for.

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