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What are put options?
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10th Nov 2009 by JonB
A put option contract gives you the right to sell 100 shares of stock (or some other asset) at a certain price for a certain amount of time. Put options are a way of taking advantage of a stocks depreciation, therefor are bought when one thinks a stock price is going to fall. For example, let's say you think shares of XYZ are going to fall in value so you bought 1 contract of December 2001 $25.00 puts. The contract cost you $2.00. You now have the right to sell 100 shares XYZ stock at $25.00 each. If the stock price only makes it to $35.00, you obviously wouldn't want to exercise your option to sell them for $25.00. but if the stock falls all the way to $15, you could make a very nice return on your initial $2.00 investment.
A put option contract gives you the right to sell 100 shares of stock (or some other asset) at a certain price for a certain amount of time. Put options are a way of taking advantage of a stocks depreciation, therefor are bought when one thinks a stock price is going to fall. For example, let's say you think shares of XYZ are going to fall in value so you bought 1 contract of December 2001 $25.00 puts. The contract cost you $2.00. You now have the right to sell 100 shares XYZ stock at $25.00 each. If the stock price only makes it to $35.00, you obviously wouldn't want to exercise your option to sell them for $25.00. but if the stock falls all the way to $15, you could make a very nice return on your initial $2.00 investment.
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9th Nov 2009 In Derivatives
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Subjects: put options,