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What would be a simple options strategy using a put and a call to exploit your conviction about the stock prices future movement?
Wiki User
∙ 11y ago
Using a put AND a call at the same time? That's a hedge.
If we could use a put OR a call to exploit your convictions, try this:
If you think the price of a stock is going to go down, buy a naked put. If the stock goes down enough for you to make money after paying the premium, you call your broker and order the option be exercised, at which point they will buy stock for you, deliver it and collect the payoff. They will put the profit from the deal in your account.
If you think the price is going to go up, buy a call. If the stock goes up enough for you to make a profit, call the broker and exercise then immediately sell.
Wiki User
∙ 11y ago
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