15) Explain the terms long call, short call, covered short call, long put, short put. Which have rights and which have

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15) Explain the terms long call, short call, covered short call, long put, short put. Which have rights and which have obligations?

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Term Definition Right Obligation 1. Long call Long call option means you have an option to purchase the stock you do not own. We take a long call option when we expect the stock prices to go up. (Bullish) Yes No 2. Short call Short call option means you have an obligation to sell the stock you do not own. We take a short call option when we expect the stock prices to go down. (Bearish) No Yes 3. Covered short call Covered short call option means you own the stock that you are selling call options on.There are typically three different reasons why an investor might choose this strategy: To collect cash income when the forecast is for neutral-to-bullish price action in a stock. To sell a stock holding at a price that is above the current market price. To get a small amount of downside protection if the stock price declines. No Yes 4. Long put Long put option means you have an option to sell the stock you do not own. We take a long put option when we expect the stock prices to go down. (Bearish) Yes No 5. Short put Short put option means you have an obligation to buy the stock you do not own. We take a short put obligation when we expect the stock prices to go up. (Bullish) No Yes When you go long - you have the right to exercise the option when you go short - you have the obligation to exercise the option

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15) Explain the terms long call, short call, covered short call, long put, short put

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