Before you get enrolled in an options trading tutorial, it is of utmost importance that you are familiar with the basics. Remember that an option is a contract that allows you to purchase an asset at a specific price in the future. Let us get acquainted to the four different types of options sales that can possibly occur.
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- A long call option will give you the right to buy an asset at a specific price in the future. Long call option holders will benefit from price increases over time.
- A long put option will give you the right to sell at a specific price in the future. Contrary to call options, long put option holders are hoping that market prices will decrease.
- A short call option gives you the right to sell not the underlying asset, but the option itself in the future. Because the “logic” of short positions is reversed, short call option holders are in similar positions to long put option holders.
- A short put option will hope that long put options become less valuable over time—consequently, holders will be rooting for prices to go up.
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Once you can understand the different varieties of options sales, you will be able to engage in more complex trading strategies. You can learn these strategies from a free options trading course too. The strategies will usually involve purchasing multiple different options in order to manage risk and increase the possibility of earning high returns.
Additionally, you can also subscribe to options trading newsletter for daily trade ideas. Learn more by visiting www.optionsgeek.com.
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