# Quick Options Question

From the Collars article:

“Short 1 ABC Jan 45 call @ \$3

Long 100 shares of ABC stock @ \$40

Long 1 ABC Jan 35 put @ \$3”

If Long 1 ABC Jan 35 put @ \$3 means you’ve bought the right to sell stock at 35 for \$300, what does Short 1 ABC Jan 45 call @ \$3 mean?

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Another way to think about it is:

• long = bought
• short = sold

So if we look at those three legs from our perspective as the investor:

Short 1 ABC Jan 45 call @ \$3

• We sold a call option and received a \$3 * 100 = \$300 premium
• The counterparty has the right to buy 100 shares from us at \$45 each (if they exercise)
• We have the obligation to sell 100 shares them at \$45 each (if they exercise)

Long 100 shares of ABC stock @ \$40

• We own 100 shares that we previously bought at \$40 each

Long 1 ABC Jan 35 put @ \$3

• We bought a put option and paid a \$3 x 100 = \$300 premium
• We have the right to sell 100 shares at \$35 each (if we exercise)
• The counterparty has the obligation to buy 100 shares at \$35 each (if we exercise)
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