movement, but is unsure of which direction the move will take. This strategy becomes profitable when the stock makes a very large move in one direction or the other. Typically, the put and call sides have the same spread width. The trade-off when employing a bear put spread is that your upside is limited, but your premium spent is reduced. In this video, I sell a call against my long stock position.
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The Greeks represent the consensus of the marketplace as to how the option will react to changes in certain variables associated with the pricing of an option contract. Check out my Options for Beginners course video, where I break down the use of a protective put to insure my gains in a stock. An investor will often use this strategy when he or she believes the price of the underlying asset will move significantly out of a range, but is unsure of which direction the move will take. The married puts P L graph looks similar to a long calls P L graph. Both options would be for the same underlying asset and have the same expiration date. In this example we are using a call option on a stock, which represents 100 shares legitimate-no scam-work from home jobs of stock per call option. The covered calls P L graph looks a lot like a short naked puts P L graph. Implied volatility represents the consensus of the marketplace as to the future level of stock price volatility or the probability of reaching a specific price point.