Is selling an option is same concept as short selling a stock?

★ SUMMARY ★
Some people believe that selling an option is the same thing as shorting but it really comes down to which option you are selling.

Remember that there are two types of options there are the PUTS and then there are CALLS.

If you are a seller of PUTS are actually looking for an upside move in the market if you are a seller of CALLS than you’re looking for a downside move in the market.

When you are trading options is very different than shorting the stock. When you sure to stock your actually borrowing shares from your broker however when you are selling options your trading contracts.

If you are referring to directional moves in the market, then shorting the stock is looking to profit from a downside movement in the stock and if you compare this to option trading then selling a call option is also looking for a downside movement in the equity.

However keep in mind that the value of shorting and selling options is not going to be the same on the profit potential simply because there are multiple options that you can get in terms of strike prices in time.

Posted at: http://tradersfly.com/2017/01/selling-option-short-selling-stock/

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