HSX Forum

Playing & Trading Strategy

Not quite the same

Posted by: Christguy on Dec 27, 13:32 in response to wtroyw's post Is buying calls the same as shorting puts? What's the...

If you are buying a CALL, then you have UNLIMITED upside potential... if you are shorting a PUT then the MAX you can make is the difference between the price of the PUT and zero.  

 

For example - I short a put that is $5.  And let's say that the PUT expires worth zero.  The MOST I will make is that $5.  

 

But if I buy a call for $5... then the MAX I will make is whatever the potential upside is for the BO of the particular movie.  Does that make sense?

 

This isn't to discourage you from shorting PUTS - lots of times it's easy money.  You just want to adjust your expectations accordingly as the upside can be limited.





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