Hedging Strategies

Long call

The long call option strategy is the most basic option trading strategy whereby the options trader buy call options with the belief that the price of the underlying security will rise significantly beyond the strike price before the option expiration date.

 Long put

In a long put trade, a put option is purchased on the open exchange with the hope that the underling stock falls in price, thereby increasing the value of the options

 Short call

A Bearish options strategy that involves short selling or "writing" call options. When the stock falls below the strike price of the call options by expiration, the call options expire worthless and the entire premium from sale is earned.

 Short put

A Bullish options strategy that involves selling short or "writing" a put option. When the stock rises above the strike price of the short put by expiration, the put options expire worthless and entire premium from its sale is earned.