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root strategies

Root Strategies: Final Review

Recap concepts related to risk profiles and single-leg strategies

Puts

Long

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

Short

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

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root strategies
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