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Short put. This options trading strategy is the flipside of the long put, but here the trader sells a put — referred to as “going short” a put — and expects the stock price to be above the ...
Options Ins and Outs. An option is a contract giving an investor the right, but not the obligation, to buy or sell a stock or other asset at a set strike price by a certain expiration date ...
A very straightforward strategy might simply be the buying or selling of a single option; however, option strategies often refer to a combination of simultaneous buying and or selling of options. Options strategies allow traders to profit from movements in the underlying assets based on market sentiment (i.e., bullish, bearish or neutral).
The writer receives a premium from the buyer. If the buyer exercises their option, the writer will buy the stock at the strike price. If the buyer does not exercise their option, the writer's profit is the premium. "Trader A" (Put Buyer) purchases a put contract to sell 100 shares of XYZ Corp. to "Trader B" (Put Writer) for $50 per share. The ...
Put option: A put option gives its buyer the right, but not the obligation, to sell a stock at the strike price prior to the expiration date. When you buy a call or put option, you pay a premium ...
If the stock price stays the same or rises sharply, both puts expire worthless and you keep your $350, minus commissions of about $20 or so. If the stock price instead, falls to below 18 say, to $15, you must unwind the position by buying back the $19 puts at $4 and selling back the 18 puts at $3 for a $1 difference, costing you $1000.
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