- CALLS
- In The Money (ITM): Stock Price > Strike Price
- Out of The Money (ITM): Stock Price < Strike Price
- PUTS
- In The Money (ITM): Strike Price > Stock Price
- Out of The Money (OTM): Strike Price < Stock Price
| LONG | SHORT | |
|---|---|---|
| CALLS | Right To Buy (Cash) | Obligation To Sell (Stock) |
| lower strike = higher prem | Trend: Bullish | Trend: Bearish |
| Max Gain = Unlimited | Max Gain = Premium | |
| Max Loss = Premium | Max Loss = Unlimited | |
| B/E = Strike + Premium | B/E = Strike + Premium | |
| PUTS | Right To Sell (Stock) | Obligation To Buy (Cash) |
| higher strike = higher prem | Trend: Bearish | Trend: Bullish |
| Max Gain = Strike - Premium* | Max Gain = Premium | |
| Max Loss = Premium | Max Loss = Strike - Premium* | |
| B/E = Strike - Premium | B/E = Strike - Premium | |
| * Assuming stock price is at $0 |
- Net Debit: Where you end up paying money to either open or close a position.
- Net Credit: Where you receive money to open or close a position.