Saturday, 17 October 2015

'Outright Option' call & put

An option that is bought or sold by itself; in other words, the option position is not hedged by another offsetting position. An outright option can be either a call or a put.
When option traders first get their feet wet trading options, they often just buy call options for a bullish outlook and put options for a bearish outlook. In their defense, they are new so they probably do not know many if not any advanced strategies which means they are limited in the option strategies they can trade. Buying call options and put options are the most basic but many times they may not be the best choice.

In addition, simply buying call options and put options without comparing and contrasting implied volatility (Vega), time decay (theta) and how changes in the stock price will affect the option premium (delta) can lead to common mistakes. Option traders will sometimes buy options when option premiums are inflated or choose expirations with too little time left. Understanding the pros and cons of an option spread can significantly improve your option trading.
BREAKING DOWN 'Outright Option'
Most option trades involve outright options. The opposite strategy to purchasing outright options is a spread trade strategy, which involves purchasing one option and selling another option of the same class but of a different series


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