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Level: Intermediate

Understand a few of the popular option strategies, plus how to define long calls and puts, covered calls and puts, and short puts. For each of the popular option strategies discussed, determine the: Market Outlook, Volatility View, Profit Potential and Loss Potential. Examine how to practically construct these basic option strategies using an online trading platform.

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Overview of the Basic Options Strategies module which introduces topics such as how to use options for bull and bear market outlooks.

An investor might use a long call option position when the share price or market is expected to rise.

Create a long call in Trader Workstation (TWS) using Option Chain.

An investor might use a short put option position when the share price or market is expected to rise.

Create a short put in Trader Workstation (TWS) using Option Chain.

An investor might be bullish on the outlook for a stock, but may wish to generate income by standing ready to have the stock called away using the covered call strategy.

Create a covered call in Trader Workstation (TWS) using Strategy Builder.

An investor might use a long put option position when the share price or market is expected to decline.

Create a long put in Trader Workstation (TWS) using Option Chain.

An investor might be bearish on the outlook for a stock, but may wish to generate income by standing ready to have the stock put to him using the covered put strategy.

Create a covered put in Trader Workstation (TWS) using Strategy Builder.

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