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In finance, a put or put option is a derivative instrument in financial markets that gives the holder (i.e. the purchaser of the put option) the right to sell an asset (the underlying), at a specified price (the strike), by (or on) a specified date (the expiry or maturity) to the writer (i.e. seller) of the put.
This difference has to stay above a minimum margin requirement, the purpose of which is to protect the broker against a fall in the value of the securities to the point that the investor can no longer cover the loan. Margin lending became popular in the late 1800s as a means to finance railroads. [1] In the 1920s, margin requirements were loose.
In exchange for selling a put, the trader receives a cash premium, which is the most a short put can earn. If the stock closes below the strike price at option expiration, the trader must buy it ...
A naked option involving a "call" is called a "naked call" or "uncovered call", while one involving a "put" is a "naked put" or "uncovered put". [ 1 ] The naked option is one of riskiest options strategies , and therefore most brokers restrict them to only those traders that have the highest options level approval and have a margin account .
Put options: Give you the opportunity to sell a security at a set price on a set date. A standard options contract is for 100 shares of stock. There are also two types of positions:
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This does require a margin account. The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves. Moderately bearish options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost.
With puts, on the other hand, you write and sell a contract in which the buyer has the right to sell you the underlying asset. You can make a steady stream of income off the premiums that these ...