Thursday, February 2nd, 2017

What does this stock trading jargin mean in laymans terms?

If you est? looking for a game of the population covered VZ? n seems now easier than ever to be a candidate for a margin in November out-of-the-money credence bull-put range below 30.? Qu? does that mean exactly? and c? mo can a person do that? ? This mean that buying shares? or short sell?


3 Responses to “What does this stock trading jargin mean in laymans terms?”
  1. gregory R says:

    It has nothing to do with buying or selling the stock. It means to sell a put option and simultaneously buy a put option with a lower strike price. The idea is to capture the difference between the strike prices. For the position to win on the following example the stock would have to close above 30 at the November expiration of the options:

    Hypothetical prices
    Example: sell 30put for 2.00
    buy 25 put for 1.25 for a net credit of .75

    As long as Verizon closes above 30 both options will expire worthless and you would keep the credit.

  2. Ted says:

    It’s an option trade, not stock. “Bullish” means you expect the stock to go up. So you sell a put option and when the stock goes up the option expires and you get to keep the premium received. But you also buy a put in the same expiry but a lower strike so you won’t get creamed if you’re wrong. The lower strike will be cheaper, so you still keep the difference. “Hedged” means that you’re taking a second position to offset some of the risk of the first position.


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