Put option selling strategy

If an investor writes a put contract, she does not expect the stock's price to drop below the exercise price. A most common way to do that is to buy stocks on margin Click here to open a trading account at OptionsHouse. For the patient investor who is bullish on a particular company for the long haul, writing naked puts can also be a great strategy to acquire stocks at a discount. Videos, webinars and more. TradeKing All-Star Webinar Series and Live Events.

A put is an option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time. The buyer of a put option believes the underlying asset will drop put option selling strategy the exercise price before the expiration date. The exercise price is the price the underlying asset must reach for the put option contract to hold value.

The possible payoff for a holder of a put option contract is illustrated by the following diagram: A call option gives the holder the right, but not the obligation, to buy a stock at a certain price in the future. When an investor buys a call, she expects the value of the underlying asset to go up. A put is the exact opposite. When an investor purchases a put, she expects the underlying asset to decline in price.

The investor then profits by selling the put option at a profit or exercising the option. An investor can also write a put option for another investor to buy. If an investor writes a put contract, she does not expect the stock's price to drop below the exercise price. Each option contract covers shares. There are other ways to work a put option as a hedge.

If the investor in the previous example already owns shares of ABC company, it is referred to as a "married put" put option selling strategy and serves as a hedge against a decline in share price. Term Of The Day A regulation implemented on Jan. Louise Yamada on Evolution of Technical Analysis. Investing in an HSA. Financial Advisors Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education.

Call On A Put.

The Simple Put Selling Strategy: Earn 5 - 10% in just 30 days

Option nokia-temy.ru: An Introduction to Options Trading Bryan Chops Investor Extraordinaire If you haven’t done options trading before, don’t worry, it is easier. A long put option can be an alternative to an short selling a stock and gives you the right to sell a strike price generally at or above the stock price. What is Long Put? See detailed explanations and examples on how and when to use the Long Put options trading strategy.

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