Replies to post #92 on Option Education

[AAsBrother]

actually I have it backwards....I need it to go up to make $....I would have to sell the 2.50 Call and it not go above 2.50 to make $ correct?

[leemalone2k3]

Hi AA

If you sell a naked put, you want the stock to close above the strike price. If you sell a naked call, you want the stock to close below the strike.

In either case you keep the premium. With the naked put, if it closes below 2.50, you will be "put" the stock which means you would have to buy it.

With the naked call, you would have to sell the stock at 2.50 and buy it at the prevailing cost if it closes above 2.50 on expiry.