In simple laymans terms, What are puts, calls? Going long, Going short? Hedge funds?

Question

Thanks in advance for any help.

Answer 1

Puts and Calls:

These are contracts, known as options, which give the buyer the right (but not the obligation) to buy (if it is a call option) or sell (if it is a put option) something (such as 100 shares of a specific stock, a future, or a commodity) prior to a set expiration date for a set price.For a more complete definition go to

http://www.cboe.com/LearnCenter/Tutorials.aspx#Basics

and go through the first few pages of the first tutorial.

Going long

This is a "buy to open" trade to purchase stock, options, futures a commodity or a currency.

Going short

This is a "sell to open" trade to sell stock, options, futures, a commodity or a currency which you did not already own.

For a slightly more detailed explanation see

http://www.investopedia.com/terms/s/short.asp

Hedge fund:

An aggressively managed portfolio of investments that uses advanced investment strategies such as leverage, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).

Legally, hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors keep their money in the fund for a minimum period of at least one year.

Answer 2

You're obviously confused, and that's OK. Why are you asking about short sales and hedging in the same post? Anyway, short selling provides liquidity. Market makers will sell you whatever you want--long or short--because they make money on the many small variations in price over the course of a trading day. You're not a MM, so you need to have some clue as to what you think the instrument you're trading is going to do.

Answer 3

This Site Might Help You.

RE:
In simple laymans terms, What are puts, calls? Going long, Going short? Hedge funds?
Thanks in advance for any help.

Answer 4

1. Puts: the right to sell a shares in an agreed time
2. Calls: the right to buy a shares in an agreed time
Going long: you hold shares for a long time (more than 3 mo)
3. Going short: you hold a shares short time
4. Hedge fund: amount of money to cover your investment from a fluctuation in value

Answer 5

I have written 155 articles on hedge funds if you are still looking for a clear answer on that part of your question.

Here is a video explaining what a hedge fund is: http://richard-wilson.blogspot.com/2007/11/what-is-hedge-fund.html

Here is a text description of a hedge fund: http://richard-wilson.blogspot.com/2007/10/what-are-hedge-funds_13.html

I hope that helps.

- Richard

Answer 6

Puts and calls refer to options trading.
You can buy or sell them.
Buy a call you want the price of the underlying security to go up. "call up"
Buy a put you want the price of the stock to go down.
"put down".
You can sell call's and put's and their you want the exact opposite to happen. if you sell a call and you don't own the underlying stock. It is referred to as a naked call. It is the riskiest position to be in. There is no limit as to how high the stock price can go.

The buyer of a call or put is only liable for the premium.

Going long refers to purchasing shares.
Going short refers to selling shares.
Buy low, sell high.

Hedge Funds are private investors that bet for or against the market. Lot's of private money.

I hope this helps.