The LONG PUT is one of the 4 basic option trading strategies and it has a bearish bias that creates an unlimited reward position with limited risk exposure. Example:  Let’s say you are bearish on Apple (AAPL) and believe that it will drop to $175 by Jan 2010.  To take advantage of this move,...

In ”Buying a Call Option – Part 1/2” we looked at an AAPL option chain and bought a Jan 220 call option for $4.35 and defined the positions potential reward, maximum risk and breakeven point. With this information we can draw a risk profile, a graph that shows the value of the call option...

The LONG CALL is one of the 4 basic option trading strategies and it has a bullish bias that creates an unlimited reward position with limited risk exposure. Example:  Let’s say you are bullish on Apple (AAPL) and believe that it will rise to $230 by Jan 2010.  To take advantage of this move, you...

In Options 101 I covered option basics and its now time to review the 4 basic option trading strategies that form the underlying foundation for all advanced techniques.  In future posts, I will cover each of these strategies in detail. 4 Basic Option Trading Strategies Long Call (buy a call option) –...