This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2015) ( Learn how and when to remove this template message)In finance, a put or put option is a stock market device which gives the owner of a put the right, but not the obligation, to sell an asset (the underlying), at a specified price (the strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).
Put writing is an essential part of options strategies. Selling a put is a strategy where an investor writes a put contract, and by selling the contract to the put buyer, the investor has sold the right to sell shares at a specific price. Thus, the put buyer now has the right to sell shares to the put seller.Selling a put is advantageous to an investor, because he or she will receive the premium in exchange for committing to buy shares at the strike price if the contract is exercised.
A profit and loss diagram, or risk graph, is a visual representation of the possible profit and loss of an option strategy atDefinition:A put option is an option contract in which the holder (buyer) has the right (but not the obligation) to sell a specified quantity of a security at a specified price ( strikeprice) within a fixed period of time (until its expiration).For the writer (seller) of a put option, it represents an obligation to buy theunderlying security at the strike price if the option is exercised.
The put option writer is paid a premium for taking on the risk associated with the obligation.For stock options, each contract covers 100 shares. Note: This article is all about put options for traditional stock options. If you are looking for information pertaining to put options as used in binary option trading, please read our writeup on binary put options instead as there are significant difference between the two.
Buying Put OptionsPut buying is the simplest way to trade put options. When the optioWriting uncovered puts is an options put option profit and loss write strategy involving the selling of put options without put option profit and loss write the obligated shares of the underlying stock. Uncovered Put Write ConstructionSell 1 ATM PutAlso known as naked put write or cash secured put, this is a bullish options strategy that is executed to earn a consistent profits by ongoing collection of premiums.
You have the right to purchasethe TV for the sale price up to 1 month regardless of how much theTV goes up or down in price during that period. You are the buying thiscall option and Wal Mart is the seller. The only difference of thisrain check versus a real option is that there is NO value on this option andi.