In order for you to understand the process, we’ll review 2 trades. Both will be reviewed in terms of how to go about choosing an expiration date and a strike price. We’ll review the gain / loss and also take into account ‘exercise’ and ‘assignment’. And after we’ve summarized both trades, we’ll give you a short quiz on each.
- Long put, long call – how doe they work?
- Review ‘MG’ - maximum gain and ‘ML’ – maximum loss.
- What does the ‘Options Chain’ look like?
- Choosing the strike price ‘in the money’.
We use Facebook as an example for a long call… …a small cash outlay can be a main motivator in a strategy.