If you try and remember the payoff formulas for each you will fail. Being able to draw the payoff diagram helps as well to conceptualize everything. diagrqm And you also know it for a Long call, Long Put, Short call and Short put.If you know this, you can recreate the entire stuff, dont need to memorize any of them.With the option diagrams of the above, think of the payoff diagram of Straddle, Butterfly etc.
Just see what all has to be added to get that diagram. CharacteristicsWhen to use: When you are bearish on market direction and bullish on market volatility.Like the long call a long put is a nice simple way to take a position on market direction without risking everything. Except with a put option you want the market to decrease in value.Buying put options is a fantastic way to profit from a down turning market without shorting stock.
Even though paykff methods will make money if the market sells off, buying put options can do this with limited risk. Plus you w.