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In the following video, we discuss strategies for buying and selling calls and puts, using Arch Coal (ACI) as an example:

  • Buying calls is a way to make outsized profits, but comes with the likelihood of losing money.
  • Buying a put is a way to profit from or protect a stock selling off, but also comes with the likelihood of losing money.
  • Writing calls is a risky way to go short on a stock unless you own the stock, in which case the calls are "covered" and the trade is the equivalent of writing a put.
  • Writing a cash-secured put means selling the right to sell a stock at a strike price by an expiration date.
Source: 4 Options Trades For Arch Coal (Video)