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 explainex 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).
For the employee incentive, see Employee stock option. The strike price may be set by reference to the spot price (market price) of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium. As you become more informed about the options market, you will need to learn how to use a long or short position in either a rising or falling market.
Going long on a call is a profitable strategy when the underlying stock price rises in value, but how can you make money on a falling stock. By going long on a buy put options explained relationship. Puts are essentially the opposite of calls and have different payoff diagrams. Read on to find out how they work - and relatinship you can relayionship.
(For more information on the long position, see Going Long On Calls.)Put Your Money Where Your Mouth IsGoing long on puts should not be confused with the technique of married puts. A:The incorporation of options into all types of investment strategies has quickly grown in popularity among individual investors. For beginner traders, one of the main questions that arises is why traders would wish to sell options rather than to rwlationship them.
The selling of options confuses many investors because the obligations, risks and payoffs involved are different from those of the standard long option.To understand why an investor would choose to sell an option, you must first understand what type of option it is that he or she is buy put options explained relationship, and what kind of payoff he or she is expecting to make when the price of the underlying moves in the desired direction.Selling a put Definition:The strike price is defined as the price at which the holder of an options can buy (in the case of a call option) or sell (in the case of a put option) theunderlying security when the option is exercised.
Hence, strike price is also known as exercise price.