Quote:
Originally posted by LegendKiller
Buying a call or put is the right, not the obligation to buy/sell. However, selling a call or put is the OBLIGATION to buy/sell at the whim of the purchaser.
You are correct in saying that you can just sell the option, all of my examples are holding the option to exercise date. As long as you have sold the option you are at risk.
LK
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So going Long on the option is the right, but not the obligation. Going Short on the option is the obligation, correct? Therefore, the Long call or put is less risky. The maximum I could lose is the value I paid for the options.