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Directional Trades with Naked Options

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Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

When many people first learn about options, they hear about buying long options for their low upfront cost and large profit potential if directionally correct. We can also use short options to take a directional position which provides a higher Probability of Profit, short implied volatility exposure, and potential profit even if the trade is directionally incorrect.

In this segment, we explore the differences in long and short directional options trades both held to expiration and managed.

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