Long Calls and Puts

Using options in this way i.e buying a call or put in lieu of owning the shares provides the opportunity for cash extraction – giving the investor similar levels of exposure to the market but using significantly less cash to do so.

With less money at risk and equally strong prospects for return, the investor or trader has the potential to profit from an up or down move in the share price. This is a basic but important strategy and these two modules form a robust foundation in trading options successfully.

Using less cash than owning shares, but having the upside potential makes being long a call, an attractive proposition. In addition, the lower level of dollars at risk in the market is equally important and is one of the key reasons why people are attracted to the options market.

Add to this the ability to equally profit from a falling market, through being long a put, and again having less cash at risk than through traditional trading methods and you are fast becoming equipped to be a true, all seasons investor – one who is able to make money in a rising, falling or sideways market.