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root strategies

Root Strategies: Final Review

Recap concepts related to risk profiles and single-leg strategies

Calls

Long

  • Long calls carry positive delta
  • Long calls are advantaged by rising IV
  • Long calls are disadvantaged by the passage of time
  • Long call delta grows into profit and shrinks into loss
  • Long calls have limited risk, and unlimited profitability
  • Long calls have a less than a 50% of POP

Short

  • Short calls carry negative delta
  • Short calls are advantaged by declining IV
  • Short calls profit from the passage of time
  • Short call delta shrinks into profit and grows into loss
  • Short calls have unlimited risk, and limited profitability
  • Short calls have a greater than a 50% of POP

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root strategies
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