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You could buy a strike put with no special rules or margin considerations to worry about. Simply sell the put in the open market - it should be trading at a higher price than you paid to purchase it because of the downward stock move. If you no longer have a bearish opinion on the stock, you also have the right to sell your long put before you lose the entire value of your investment.
Exiting your put position before it expires worthless allows you to further minimize potential losses. Long puts as an alternative to short selling carry the same risk of any other put purchase: If the stock stays above the strike price, you can lose the entire premium upon expiration. Use promo code FREE Join Nicole Wachs as she compares and contrasts these popular strategies. For each play, she covers the basics, main Many option traders are used to only trading options that expire every month.
The introduction of weekly expiring Watch as Nicole Wachs explains the difference between Market and Limit orders. She also covers how to read important Options involve risk and are not suitable for all investors. Options investors may lose the entire amount of their investment in a relatively short period of time. Online trading has inherent risks due to system response and access times that vary due to market conditions, system performance and other factors.
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Top Ten Mistakes New Option Traders Make. Five Tips for Successful Covered Call Writing. Five Option Plays for Any Market Condition. Tuesday Midday Market Call. Open your TradeKing account today! An Example of Buying a Put Instead of Short Selling You might profit in one of two possible ways:. Simply sell the put in the open market - it should be trading at a higher price than you paid to purchase it because of the downward stock move. Exiting your put position before it expires worthless allows you to further minimize potential losses.
What are the risks in using puts as an alternative to short selling?. Bookmark or Share This Article. Selling Cash-Secured Puts For Income Buying Puts as an Alternative to Short-Selling. Securities offered through TradeKing Securities, LLC, member FINRA and SIPC. Forex offered through TradeKing Forex, LLC, member NFA.
Puts and Calls - How to Make Money When Stocks are Going Up or Down (Part 1 of 2)
Trade Free For 90 Days When You Open an OptionsHouse IRA. Sign Up!. See how to "Safely" make $59k trading options 15 minutes a week!. Detailed example of how to buy put options instead of short selling a stock for which you have a bearish outlook.