CNBC Explains: Options
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Want to succeed at trading options? You need to understand exactly how these contracts work. Salman Khan of the Khan Academy explains call options: contracts you purchase if you think a stock will go up in the near future.
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Salman Khan of the Khan Academy explains put options, which are contracts you purchase if you think a stock will go down in the near future.
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For many sophisticated investors, trading options is a routine practice that can be hugely profitable, but retail investors can also transact options contracts on the open market.
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By putting less money on the table to magnify profits, call options can have the same effect as investing with borrowed money, which is known as using leverage. CNBC explains.
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Put options are essentially bets that a stock will go down, but they can also be used by investors to hedge their portfolio against a downward move in stock price. Salman Khan of the Khan Academy explains.
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Salman Khan of the Khan Academy explains put options, which are contracts you purchase if you think a stock will go down in the near future.
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Put-Call parity demonstrates the relationship between shorts, puts, calls, and bonds. The proper combination of each can yield equal payouts. Salman Khan of the Khan Academy explains.
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Put-Call parity demonstrates the relationship between shorts, puts, calls, and bonds. The proper combination of each can yield equal payouts. Salman Khan of the Khan Academy explains.