 Hi everyone, thanks for joining today's video. Today we'll be talking about short put options versus long call options, and we'll be looking at the difference between going short on a put option, meaning selling a put option, versus going long on a call option, meaning buying a call option. This is gonna be an introductory video as part of a series aimed at helping you understand some of the basics and foundational terminology you'll need to know as you get counter learning about, talking about and eventually trading option strategies. We'll be looking at the difference between buying, also known as going long, and selling, also known as going short, as well as the difference between call options and put options. So I have the SPY ETF pulled up in the Thinkorswim. This is the one year one day chart as well as some indicators down here. What we're gonna be doing right away is going into the trade tab. I did wanna point out a couple basic things about the options chain before we actually go into selling versus buying. So for today's example, we're gonna be pulling up the seven data expiration SPY option chain for January 2nd, 2024. So a couple things about the option chain. For Thinkorswim, you're gonna see calls on the left and you're gonna see puts on the right. In most trading platforms or options, this is gonna be similar. This is the general user experience, but you can always customize things. In my screen here for this option chain, I have a couple different columns. I'm showing all strikes. The expiration date is in the middle, strike is in the middle, but I have open interest, the delta, bid and ask going from left to right and calls and right to left on puts. As far as options trading goes, volume is something that's gonna be important to look at. So for open interest, you're gonna see numbers here ranging from zeros to in the thousand. So what this is telling you is at any one time for the January 2nd, 475 call option, there are 3581 contracts open at this very time. So that's important because you wanna have liquidity in your options trading. Think about if you're buying and you wanna get out of a contract by selling, it's gonna be a lot easier to do that in the options that are trading in the thousands versus the options that have open interest in the zeros because no one's interested in those options contracts. The delta column, that's gonna be telling you at any given time here what the probability is of that options contract expiring in the money. So if you're gonna be buying an options contract, you want it to expire in the money. If you're gonna be selling an options contract, you are going to want it to expire out of the money. So you can see these ones are out of the money right now in the dark shaded, in the purple shaded, these are currently in the money. So just to point out one example here, if I were to be looking at the 29 delta, this is 479 strikes January 2nd, right now there is a 70% chance these will expire out of the money and a 30% chance they will expire in the money. If you're looking at some of the currently in the money options, looking at the 468, there is an 82% chance this will continue to be in the money at expiration date January 2nd, conversely an 18% chance this will fall out of the money before the January 2nd expiration date. Bid and ask, if you're clicking on an ask, that is going to bring up a single buy contract. And if you're looking at the bid, clicking on that, bid is equated to selling that options contract. And the difference between the bid price and the ask price is sometimes called the bid ask spread. We wanna be looking at options with a tight bid ask spread so that we're not giving up any of that value back to the market. Let's look at two trades that have similar biases on the market, which in this case would be a bullish bias, but have two different executions and two different risk profiles. We're gonna look today at selling a put option or going short on a put option or short put or going long and buying a call option. So for this situation, we're gonna look at two options contracts, one on the put side, one on the call side that have the same or very close delta, which makes them comparable by risk profile. So I already have these pointed out here, 30 delta on either side, this is gonna help us do two comparable trades. Let's look first at buying a call, again ask is gonna be where you would select for buying an option, hit confirm and send and then let's look at the risk profile here in the following slide, but just numbers here, your max loss is gonna be the premium that you're paying to open this contract and your max profit, if SPY aligns with your bearish, or sorry, your bullish outlook and goes through the roof, it's an infinite profit on this one. So let's look at the risk profile here on the analyze tab, think or swim. So this is an option to contract with the expiration of January 2nd, so we're gonna need to set the date up top to January 3rd, which would be the morning after that last full day, the options contract is in play. We're also gonna make sure that our break even is January 3rd, so this line, this price slice represents the break even point for this trade. So your Y access, you're gonna see that is your risk profile here, that is your break even, all the way up to many thousands and down to negative many thousands here. This teal line is going to be from left to right on the X access, your profit and loss, it's graphed out here. On the X access, your strike price is laid out, going down almost to zero, sitting at around mid to high 400s where it is now. So you can look, $121 is the maximum risk, that's a limit on the downside, the upside on this trade, if SPY goes through the roof, you could make tons and tons of money, never have to trade again. Very unlikely that's going to happen, but it is an unlimited upside. So let's keep this trading the analyze tab and go back to the options chain. So we're gonna look at in this situation, selling a 30 delta put option with a 472 strike price. Let's see what that would look like. So not max loss is an infinite, but it's well up there. Your max profit is going to be as a seller of the option, think of yourself as the insurance agency collecting a premium, but what you do there is you're also opening yourself up to, well, it's very unlikely, a very, very, very high loss. Let's analyze this trade here. So you're looking at these two trades, it's almost the inverse, there is on one side of the trade, a capped upside here, $114. And there is an unlimited downside here. This is selling a put option, same bias, different execution, and then buying a call option, capped downside unlimited upside. So again, many of, many option sells, especially in the beginning, this is going to be your max loss here. Many brokers won't allow you to do this. So instead of selling a naked put, they call this with unlimited downside, you can sell what's called a cash secured put or a covered call on the opposite side of that with a different bias. We actually get to these strategies in the videos linked below as you start to understand the basics of shorting options or going long on options, selling versus buying and calls versus puts, you can start to roll these strategies together and paired with longer-term holdings. You can have a longer-term plan that's a cyclical plan that will bring you some extra profits if the market stays where it's at or doesn't move much. Please, after you watch these videos a few times, check out the ones in the link below. Thank you.