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| Discuss Difference between Writing call and buying call option? at the Options within the Traderji.com - Discussion forum for Stocks Commodities & Forex; Dear Senior members, I am new to this option trading. What is the different between ... |
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#1
29th June 2006, 03:42 PM
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Difference between Writing call and buying call option?
Dear Senior members,
I am new to this option trading. What is the different between buying an call option and writing call option? Please explain me on this. And also I heard that If we go short on option, on the expiry day, if we don't cover our short, then the system will cover the short automatilcally at 3.30. In that case, at what price the short will be closed. I.e. on last traded price or the difference between strike price and current price? Let me explain the above case with the following example. I go short on 3100 call option at some price. At the end of the expiry date, Nifty closes at 3130 and the option is traded at 25(say). Now What happens? Whether the difference between strike price and closing price of 30 will be price the system will cover the short or traded price of 25 will be covered? 
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#2
29th June 2006, 07:52 PM
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Re: Difference between Writing call and buying call option?
Quote:
Sethu.. To 'write' is to sell ... hence it's the opposite of buy Difference between strike price and current price is not relevant ... its the the traded price of the option at closing at which your short will be covered (or compulsarily squared off) AGILENT
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#3
29th June 2006, 09:17 PM
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Thank you Agilent
Thank you sir.
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#4
29th June 2006, 10:23 PM
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Re: Difference between Writing call and buying call option?
You are welcome.
Two small tips : - if u want to get into Options, u must read and re-read a good book beforehand, and - do occasional mock trading for at least 2 few months before you start playing with real money These may sound like cliches, but believe me : no matter how good u r at cash/delivery trading, options is a different ball game altogether ... I mean much more risky (of course potentially much more profitable) Good luck AGILENT
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#5
30th June 2006, 12:35 AM
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Re: Difference between Writing call and buying call option?
Quote:
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#6
30th June 2006, 10:18 AM
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Re: Difference between Writing call and buying call option?
Quote:
Well I refer to one captioned Traded Options , by Peter Temple , published by Prentice Hall. Doubt you will get it in India . though Its good for beginners and internmediate level traders AGILENT
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#7
30th June 2006, 12:47 PM
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Re: Difference between Writing call and buying call option?
Thank you for all your guidence. I am reading some articles posted in www.option-trading-guide.com about options. It helps a lot to understand option.
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