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Long Call Vs Short Put: Presented by

Long call and short put are both bullish options strategies. With a long call, the buyer has the right to buy the underlying asset at a set price. Their potential profit is unlimited but their loss is limited to the premium paid. With a short put, the seller has the obligation to buy the underlying asset if assigned. Their potential profit comes from collecting premiums but their loss is unlimited. Both strategies can profit when the underlying asset rises above the strike price, but the long call allows for unlimited upside whereas the short put caps upside at the premium received.

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55 views

Long Call Vs Short Put: Presented by

Long call and short put are both bullish options strategies. With a long call, the buyer has the right to buy the underlying asset at a set price. Their potential profit is unlimited but their loss is limited to the premium paid. With a short put, the seller has the obligation to buy the underlying asset if assigned. Their potential profit comes from collecting premiums but their loss is unlimited. Both strategies can profit when the underlying asset rises above the strike price, but the long call allows for unlimited upside whereas the short put caps upside at the premium received.

Uploaded by

govardhan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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LONG CALL vs SHORT PUT

Presented by:
Rohit Acharya F-1
Sanjay Dyavanapelli F-11
Govardhan Jilla F-17
Pravin Kolge F-22
What is Options ?

• Options are derivatives product


• Options give a trader the right but not a obligation to buy or sell a
stock at an agreed-upon price and date
• Investors use option for primary reasons to Speculate and to Hedge
their risk
• There are two types of options:
- Call Options
- Put Options
Long Call

• Buying a call is called Long call.


• It gives the option buyer right but not an obligation to buy an
underlying asset at a predetermined price & time.
• Option buyer expects market to rise (bullish market)
• Profit potential is unlimited
• Loss is limited to the extent of the premium paid
• Break Even = Strike price + Option Premium
Long Call - Example

• Spot Price – INR 100


• Strike Price – INR 120
• Option Premium – INR 5

• Break Even – INR 125


Short Put

• Selling put means Short put


• This option seller has an obligation to buy the underlying asset at
a predetermined price & time
• Option seller expects market to rise (bullish market)
• Profit potential is limited to the extent of premium received
• Loss is unlimited
• Break Even = Strike price – Premium received
Short Put - Example

• Spot Price – INR 100


• Strike Price – INR 80
• Option Premium – INR 5

• Break Even – INR 75


Conclusion

• If you check both strategies –


-When strike price reaches around INR 70 both options are in loss
of INR 5
-When the same price reaches around INR 130 both options are in
profit of INR 5
• The long call is widely used option in the market as it attracts
buyers with a statement “Unlimited profits & Limited losses”
whereas the short put is the option which is used by the people
who want regular income ( A short put is called an income
generating strategy)

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