Question

Give a brief example of Cash Cover Put ?

Give a brief example of calendar spread?

Answer 1

1. A cash covered put is a strategy that consists of two separate parts. Part 1 is where you write an out of the money put option and Part 2 is where you put aside money at the same time in case that is required to buy the underlying share in cash if your strategy in part 1 does not work out in your favor. The expectation is to acquire the stock at lower price than what is selling in the market.

2. Calendar spread means you are not sure how the stock price is going to move. Therefore, you take a short position and a long position on the same stock at the same strike price on the same expiration date simultaneously and expect to make money on one side.