Investors who believe that a stock price will increase over time are said to be bullish. Investors who buy calls are bullish on the underlying stock. That is, they believe that the stock price will rise and have paid for the right to purchase the stock at a specific price known as the exercise price or strike price. An investor who has sold puts is also considered to be bullish on the stock.
The seller of a put has an obligation to buy the stock and, therefore, believes that the stock price will rise. Investors who believe that a stock price will decline are said to be bearish.
The seller of a call has an obligation to sell the stock to the purchaser at a specified price and believes that the stock price will fall and is therefore bearish. The buyer of a put wants the price to drop so that they may sell the stock at a higher price to the seller of the put contract. They are also considered to be bearish on the stock. Dictionary Term Of The Day. A conflict of interest inherent in any relationship where one party is expected to Broker Reviews Find the best broker for your trading or investing needs See Reviews.
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Become a day trader. Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5. The Options Market Place 4. Option Taxation And Margin Requirements 5. Bullish Investors who believe that a stock price will increase over time are said to be bullish.
Bearish Investors who believe that a stock price will decline are said to be bearish. Calls Puts Buyers Bullish: Have right to buy stock, want stock price to rise Bearish: Have right to sell stock, want stock to fall Sellers Bearish: Have obligation to sell stock, want stock price to fall Bullish: Have obligation to buy stock, want stock price to rise Buyer Vs. A full analysis of when is it better to trade stock futures vs when is it better to trade options on a particular stock.
A quick overview of how each of them works and why would a trader, investor, An option gives the buyer the right, but not the obligation, to buy or sell a certain asset at a set price during the life of the contract.
A futures contract gives the buyer the obligation to Learn about a strategy that may be appropriate if you have a positive outlook on a stock. Learn to ace the questions that involve both options contracts and stock positions. Discover the option-writing strategies that can deliver consistent income, including the use of put options instead of limit orders, and maximizing premiums.
A look at trading options on debt instruments, like U. Treasury bonds and other government securities. Short selling and put options are used to speculate on a potential decline in a security or index or hedge downside risk in a portfolio or stock.
There are times when an investor shouldn't exercise an option. Find out when to hold and when to fold. Agents, brokers and realtors are often considered the same. In reality, these real estate positions have different responsibilities Understand the difference between active portfolio management and passive portfolio management, and how each strategy benefits Identify the differences between federal and private student loans, and what Sallie Mae does and doesn't do nowadays.
Before investing in a company with multiple share classes, be sure to learn the difference between them. Get Free Newsletters Newsletters. The Options Market Place. Option Taxation And Margin Requirements. Have obligation to buy stock, want stock price to rise.More...