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POSTED BY ON October 17, 2012 7:42 pm COMMENTS (2)
Can any one to explain me .
First of all in SHORT what does Long call , Long put, Short Call , Short put mean and what is it’s use in real life trading.
AND
” If the shares price has gone above the exercise price of Rs100 then we would not exercise as we can sell at a bette price in the market directly” WHAT DOES THIS LINE MEAN.
So here my QUESTION is how come we can sell at better price directly WHEN and WHY would we do so.
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Going Long on A Call means Buying the CALL
Going Long on a Put means Buying the PUT
Going Short on A Call means Selling / Writing the Call
Going Short on A Put means Selling / Writing the Put.
If the underlying stock moves up, your CALL will keep increasing, subject to certain Option Greeks. And Vice versa.
Option calls or puts are hardly exercised. Once you achieve a pre-determined profit you can simply close your position.
Please note that options are a wasting asset and have a limited life span. It is NOT for a novice / beginners, unless you thoroughly read up on the subject and practise for a few months on a demo account.
Hope this answers your query.
Sriram
If you go long on something it means you buy it upfront expecting the instrument will rise
Long call means you buy a call and wait for it to raise
Long put means you buy a put and wait for it to raise
If you go short on something you sell it first then buy it expecting the instrument to drop in value
Second part of the question is copied from some source without the preceding sentences – not clear