Les Opérations sur Options

I got a little deeper today. In the book I'm reading, The Complete Guide to Options Spreads and Combinations, I took my time on just 3 pages explaining calls and puts. I realized that this foundation was important, so I rewrote a few things and I was able to understand the conclusions drawn.  For the blog, I'll only write what I truly understand. As with everything I post, I encourage the reader to dig deep too.

Calls - at expiration, stocks are bought
Puts - at expirations, stocks are sold (you better own 'em)

In/at/out-of-money pertains to profit/loss (P/L) at that moment, specifically when buying calls or puts. So for calls:

• In-the-money: strike price < stock price 
•  At-the-money: strike price ~ stock price 
•  Out-of-the-money: strike > stock

I'll put up charts later.  Selling calls or puts are done to hedge against positions.

A spread is when you buy one option and sell another.

• When the two options differ in strike price, it's a vertical spread
• differing in expiration date is a calendar spread
• Combining the two, it's a diagonal spread

An option combination is owning underlying stock and options, i.e. selling a call against underlying is a covered call.  Buying both an at-the-money call and put is a straddle.

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 In forex, I was stopped out again using the Trend Rider strategy.  Now, I'm in a USDCHF (US dollar and Swiss Franc) trade, and I've watched it go up to $150, but not my target profit, so I let it sit... Now, it's -$10.  I hear "let your winners ride," and "take the small wins," simultaneously, but I'm training myself to be disciplined in my trades.  If I'm stopped out of this one, on to the next.

Tomorrow, I plan on breaking down my trading history so far as well as pick up a little more on the options side of things.