Put Options

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Simran Chhabra (Querist)
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04 November 2022 Hey!!

Can someone explain to me the short put options graph with the example of a shareholder??
I am an economics student. I have understood the graph with the example of an insurance company but cannot understand it with that of a shareholder.
Also, if possible can you also clarify the difference between short and long positions?

Thank you so much!!

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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04 November 2022 A short call is an options position taken as a trading strategy when a trader believes that the price of the asset underlying the option will drop. Therefore, it's considered a bearish trading strategy. Short calls have limited profit potential and the theoretical risk of unlimited loss.

A long call option is, simply, your standard call option in which the buyer has the right, but not the obligation, to buy a stock at a strike price in the future. The advantage of a long call is that it allows you to plan ahead to purchase a stock at a cheaper price.
A call option gives the holder the right to buy a stock and a put option gives the holder the right to sell a stock.

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