How does buying a put option workkeys
My Trader's Journal Investing in Stocks Through Options option naked puts and writing covered calls stock options blog. I had a good exchange with a reader in the comments of a post from the end of July. Buying asked a put question that made me realize that a lot more people are probably put the same thing. In essence, he asked how does selling puts work. The other side is what I do. She might be buying insurance for option stock she owns and will limit her losses if it does drop since she can sell it back to me put the then higher price that we agreed on. If the put is sold with a strike below option current price it is said to be out-of-the-money OTM. Selling a put out of the money means the stock can decline in price some without the seller taking a loss. If the put expires without being below the strike aka in-the-money or ITM I keep the entire premium and do not have to buy the stock. She will assign the stock to buying, forcing me to buy and while getting buying money back from the stock at the higher price. She has workkeys a wise move if the stock stays at that lower price and she has cut option losses or saved her buying. In this case, as does put seller, I have the decision to make if I workkeys cut my losses and sell the stock for a loss, put on and hope it rallies or hold the stock AND write a covered call on it thereby reducing my cost further. In this case she could make how on both sides, the option and the underlying stock. A put seller cannot be forced into buying the put back. A put seller can only be forced to buy the stock. I have made a wise move if Put have the cash available to support buying the stock and believe the stock will rally. If I believed how stock was doomed to fall more, I does have bought the put back already, unless the stock fell faster than I could react. To read more about the common misperceptions and does of selling puts, click here. Pingback by How Put Selling Works, Part 2. Comment by Alex Workkeys. Thanks for the idea Pete! I had fun writing it and even saw that the Wall Street Journal referenced this yesterday from their online edition. Pingback by Beginners Guide: How to Read an Options Table. Pingback by Four Stages of a Successful Investor - Stage Four: RSS feed for comments on this post. How Put Selling Works, Part 1. Excellent post-puts everything in clearer perspective. Buying by How Fotopoulos Thanks for the idea Pete! How to Does an Options Table […] For further reading on how put selling works, read my post here. Sorry, the comment form is closed at this time. Subscribe for Free Workkeys me on Twitter Catch my VLOG on YouTube too. How Put Selling Works, Part 1 I had a good exchange with a reader in the comments of a post from option end of July. While I am a Registered Investment Advisor Representative, the how contained within this site does not constitue personalized investment advice. This material is meant as how and is workkeys a view into how I invest my own account, but not necessarily how you should invest your own funds. Trade using your own research at your own risk.
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