American Investment Training

Tuesday, August 30, 2016

Stock and Option Hedging - Long Stock Writing Options - Series 7 Tutorial

Buying Stock and Writing (selling) call options as a hedge is a long practiced options strategy for decades. It is also a position that is tested on the Series 7 exam and what Brokers-Traders need to know.

A stock hedge with writing call options is an income strategy - also called covered call writing.

Selling or shorting call options on their own is a dangerous undertaking in the stock trading markets. Shorting option contracts that are NOT covered requires that person to deliver (sell) shares of stock to the call holder at a specific price. If the writer does not own the stock, there is an unlimited loss potential - since the stock can rise to an infinite amount.

Owning the stock "covers" the option. If the option is exercised, the stock is used to fulfill the obligation on the contract.

Strategy Example

Long 100 Shares @$80
Short 1 Feb 85 Call for $300

The Maximum gain, loss and break-even are all tied to the stock performance and the premium received on the option.

The break even is 77. The stock is owned at 80, but the investor received a $300 premium which lowers the overall cost to $7700

The Maximum loss is that total outlay of money. $7700. The $8000 of stock could decline to zero, but the $300 would be retained.

The Maximum gain is the difference between the purchase price and the strike (sell) price on the contract.  That difference is $300 + $300 for the premium received for a total maximum gain of $600.

TAKE A     PASS GUARANTEE ONLINE SERIES 7 COURSE 

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Saturday, August 27, 2016

Series 65 Online Course with Pass Guarantee

American Investment Training 

SERIES 65 INVESTMENT ADVISER 

PASS Guarantee Online Course

No Sponsorship needed




Our virtual Series 65 university offers:
  • 8 Practice Final Exams with over 1100 questions
  • 20 sections covering every topic on the Series 65 with 20 Practice Subject Quizzes with Accurate and Very Detailed Answers
  • Extra Hard Copy Exams on Request (included with course price)
  • Printable PDF Exams
  • Glossary Links
  • Tutor Slides and Instructor Notes
  • Unlimited phone and email support
  • PASS Guarantee - Can't beat THAT!
Over 15 years of online training experience.


If you complete all sections of the training and pass the practice exams, you will then take a Series 65 Greenlight Exam - Once THAT is passed you are good to go! Guaranteed!