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| Topic | Stock Topic 25 |
| red sox 777 03/25/21 12:17:02 AM #497: | Sunroof posted... * Do you pay a premium up front in buying both puts AND calls? Yes * Do you own the stock if the strike price does not hit in buying both puts AND calls? Depends. You could own or not own the stock independently of whether you own options. Buying options never obligates you to own the stock. * You only make money if the strike prices hit in buying both puts AND calls? If you are holding to expiration, yes. It's possible to profit by closing out of the money options during a short term spike in their price. For example, a GME $30 put probably saw its price increase a lot between when GME plunged from $100 to $50. If you kept holding it it would never have crossed the strike price but if you sold it when the stock had just plunged to $50 you probably made money. * Your goal is to have a wide gap between the strike and closing prices in buying both puts AND calls? Yes. --- September 1, 2003; November 4, 2007; September 2, 2013 Congratulations to DP Oblivion in the Guru Contest! ... Copied to Clipboard! |
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