- Writing Call Options - Selling Call Options Example
- Stock Options Explained - Stock Options Basics
- Learn Stock Options Trading : Learn Puts and Calls
- How to Trade Stock Options - Basics of Call & Put Options
- Writing Covered Calls On Dividend Stocks | Investopedia
A put option is the exact opposite of a call option. This is the option to sell a security at a specified price within a specified time frame. Investors often buy put options as a form of protection in case a stock price drops suddenly or the market drops altogether. Put options give you the ability to sell your shares and protect your investment portfolio from sudden market swings. In this sense, put options can be used as a way for hedging your portfolio, or lowering your portfolio&rsquo s risk.
Writing Call Options - Selling Call Options Example
What is so special about $65 a share, April, and the 8rd Friday of each month for that matter? Nothing. Strike prices, options expiration months, and the 8rd Friday are all arbitrarily set by the options exchange.
Stock Options Explained - Stock Options Basics
It is called an "put" because it gives you the right to "put", or sell, the stock or index to someone else. A put option differs from a call option in that a call is the right to buy the stock and the put is the right to sell the stock.
Learn Stock Options Trading : Learn Puts and Calls
So as the stock goes up in price, the 95 Call option goes up in value. A $695 stock price means you get a $95 discount in price etc. etc.
How to Trade Stock Options - Basics of Call & Put Options
Now imagine that IBM comes out with a new product and the stock shoots up in price to $677. You own a contract (Call option) that says you can purchase it for $95 a share.
Writing Covered Calls On Dividend Stocks | Investopedia
Put buying is the simplest way to trade put options. When the options trader is bearish on particular security, he can purchase put options to profit from a slide in asset price. The price of the asset must move significantly below the strike price of the put options before the option expiration date for this strategy to be profitable.
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Writing or selling covered options , which is the other side of the more risky long call or put option position, is a stock option explanation for another day and if there’s enough interest I might cover writing options (ie selling options ) in another tutorial.
I noted earlier that 85% of option buyers lose money and that 65% of option sellers make money. There is a very simple explanation for this fact. Since stock prices can move in 8 directions (up/down/sideways) it follows reason that only 6/8 of the time will the stock move in the direction that the buyer of the stock or the buyer of the put wants. Therefore, 7/8 of the time the seller of the option is the one making the money!
As in the example above, you can buy the AAPL $695 put for $755 and when AAPL is later at $665 you can sell your put for $85 or $8555 per contract. In this instance you still own the stock and have taken a similar loss on owning the stock, but that loss on the stock is offset 6:6 for the profit you made on the put option.