Appendix I. Strategy Table

StrategyExecutionBenefitsDisadvantagesComponent PartsRisk Profile
Long CallBuy a call.Capped risk; uncapped reward; better leverage than stock purchase.Can lose entire stake if the call expires OTM (out of the money).
Long PutBuy a put.Capped risk; uncapped reward; better leverage than straight stock shorting.Can lose entire stake if the put expires OTM (out of the money).
Short Call (naked)Sell a call.Shortterm income strategy. ...

Get Options Made Easy: Your Guide to Profitable Trading, Second Edition now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.