What is the difference between Short Options and Long Options?
|
Topic |
Long Options |
Short Options |
|
Position |
Buy option |
Sell option |
|
Your Role |
Option Holder / Buyer (has choice) |
Option Writer / Seller (has obligation) |
|
Initial Funds |
Paying premium |
Receive premium |
|
Max. Potential Profit |
Large / Unlimited |
Limited (premium only) |
|
Max. Potential loss |
Limited (premium) |
Huge potential / unlimited |
|
Market View |
Price moves strongly |
Prices are stagnant or going against buyers |