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?
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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