Let me share an options quiz with all of you-

1) Is a call option opposite of a put option?

2) What is the meaning of an ATM option? More specifically, must the current price of the stock equal to the strike price?

The answers will help trader understand options better and I will post it in a few days. Hope all of you give a try and discuss later.

Eugene

Let me try Eugene,

1. Call and put are similar. They increase in premium when the underlying is moving in the direction of the call or put. That means, call premium goes up when the underlying goes up in price, and put premium goes up when the underlying goes down in price.

2. Yes, the options are called ATM when the stock price must be equal to strike price.

Thanks for that weekend quiz.

Welcome both of you. Good initiatives! $0.10 each!

Well done and good try !

The answer to (1)----> No, a call and a put is the same, they have the same risk graph.

The answer to (2) is ------->I guess what you have given is a textbook answer (ATM option refers to an option whose strike price = current underlying price) versus a market maker's answer (ATM option refers to an options whose strike price is closest to the underlying price).

Eh, thanks for the reply, good for my brain.