Stock Options Guide - Short Put and Short Call

1. Short put, receive the premium immediately.
   • Taking TESLA (US stock symbol: TSLA) as the example:
     • The closing price is assumed to be $700,
     • Calculate the strike price at a 20% discount, which is $560 (700 x 0.8),
     • The premium is assumed to be $0.5,
     • Expires in one week.
   • After a week there are two situations:
     • The contract ends when TSLA closes above or equal to $560. There is no follow-up.
     • With TSLA closing below $560, you have two options:
       1. Pick up the goods, and then short call to earn the premium. See below for the short call method.
       2. Don't want to pick up the goods, transfer the warehouse, and push the expiration date back.

2. Short call, receive the premium immediately.

Continuing the TSLA example, if the order is received at $560. Options that expire next week can be short called.

• After a week there are two situations:
  • TSLA closed below $560, closing the contract. There is no follow-up.
  • If TSLA closes above or equal to $560, you have two options:
    1. Sell the goods and let the other party exercise their rights.
    2. If you don't want to sell the goods, transfer the position and push the expiration date back.

The above strategies are suitable for long-term or short-term investors, and of course for option investors.

Note: US stock options are based on one hundred shares.

Disclaimer: The above is only the information sharing of the printing and research institutes, not investment advice.

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