You hedge a call you sold by purchasing a put in usually the same security.
It depends on whether the short call is covered or naked. If you have a short covered call (you own the stocks you wrote the call on), you wouldn't hedge it--if the call gets exercised you turn over the stocks you own and call it good. If you have a short naked call (you don't own the stock), hedge with a long call that has a strike price no more than the strike price of the short call. Maybe a few bucks less, if you can get it--if the counterparty to your short call exercises it, you exercise your long call, turn over the stock you received. Your profit will be the difference between the premiums on the calls, plus the difference between the strike prices.
As far as I know there isn't a "buy option," but a call option is an option to buy so I guess you could think of it as a "buy option."
A call option allows its purchaser to buy ("call in") stocks at a certain price on a certain date--say, 100 shares of Walmart for $50 on November 1. A put option allows its purchaser to sell ("put") stocks on a certain price for a certain date. The seller of the option has to buy them (in a put) or sell them (in a call) if the option is exercised.
The value of a call option on maturity is equal to its intrinsic value.For instance, a call option with a strike price of $10 on maturity and its underlying stock being at $15 will have a value of $5, which is its intrinsic value.
The only difference between a long call option and a long futures position is the derivative itself--one of them is an option, the other is a futures contract.
You could either buy a higher call and create a credit spread to hedge the short call option OR Buy some of the stock and use it like a covered call strategy.
Hegh
Sell the unerlying stock short.
It depends on whether the short call is covered or naked. If you have a short covered call (you own the stocks you wrote the call on), you wouldn't hedge it--if the call gets exercised you turn over the stocks you own and call it good. If you have a short naked call (you don't own the stock), hedge with a long call that has a strike price no more than the strike price of the short call. Maybe a few bucks less, if you can get it--if the counterparty to your short call exercises it, you exercise your long call, turn over the stock you received. Your profit will be the difference between the premiums on the calls, plus the difference between the strike prices.
a thicket
Mrs. Tiggy-Winkle
Long puts are hedged with short calls; short puts are hedged with long calls.
As far as I know there isn't a "buy option," but a call option is an option to buy so I guess you could think of it as a "buy option."
Put options are hedges for long positions. As such, you should buy put options to hedge against a long gbp position.
hedge pig= hedge hog
That sounds like a hedge apple. I use to call it a brain tree when I was a kid, because a hedge apple resemble a brain.
A call option allows its purchaser to buy ("call in") stocks at a certain price on a certain date--say, 100 shares of Walmart for $50 on November 1. A put option allows its purchaser to sell ("put") stocks on a certain price for a certain date. The seller of the option has to buy them (in a put) or sell them (in a call) if the option is exercised.