1. Lesson 10: Options and Shorts
Unit 2: The Stock Market
Lesson 10: Options and Shorts

2. Lesson Objective
SWBAT describe how to use options and shorts to guard their investments and take advantage of unfavorable economic conditions.

3. WOTD/Initial Activity
Leverage
the exertion of force by means of a lever or an object used in the manner of a lever.
use borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.
Initial Activity
Is it possible to profit when the economy is sinking towards recession rather than growing?
How would you try to protect your portfolio from losing money when the economy is doing poorly?

4. Activity 1: The Short Sale
Focus Question: How do investors take advantage of negative economic news by using short sales?
Read Short Sales
When would you want to short sell a stock?
How does short selling work?
Why is short selling a risky practice?
What is a short cover?
Share Out

5. The Short Sale Quickwrite Share Out & Discuss
Could you see yourself using short sales in the stock market game?
How does risk vs. reward relate to short sales?
Share Out & Discuss

6. Activity 2: Options
Focus Question: How do investors use the economic indicators published by the Federal Reserve to choose which stocks to invest in?
Read How Options Work
How can you make money from the use of options?
What is a call? What is a put?
How do options work?
Share Out
Groups of 10, sit together in circles

7. Summary Discussion Why would investors use options and shorts?
What is the inherent risk and reward in using these strategies?