Abstract
Options play a significant role in the financial markets. These types of securities’ values are derived from other securities such as stocks or bonds and, in recent years, cryptocurrencies. Options and futures are derivative securities, meaning their payoff is dependent on other securities’ price movements. Option contracts are traded in many exchange markets such as the Chicago Board Option Exchange (CBOE), Chicago Mercantile Exchange (CME), and over-the-counter markets. These option contracts include two types of options: call options and put options. Each type can be used in conjunction with the other for- certain strategies. The strategies described in this chapter can be used for buying or selling uncovered or covered option contracts. Uncovered or naked options are speculative strategies and entail buying or selling options without owning the underlying investment, stock, or cryptocurrency. Covered strategies involve buying or selling option securities in conjunction with owning the underlying stock or cryptocurrency.
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