Payoff from selling a put option 668


A put option is the right, but not the obligation, to sell an asset at a prespecified price on, or before, a prespecified date in the future.Long PutThe payoff diagram of a put option looks like a mirror image of the call option (along the Y axis). If the stock is above the strike at expiration, the put expires worthless. 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). Now think about the other side of that transaction.

In order for someone to buy the put option, someone has to have sold the right to that person. The person buying the put option hopes the price of the underlying stock will go down, and the person who sold that person that right is hoping the price will stay the same or go up. If the owner of the put option is going to exercise it and sell the stock at the strike price, they have to be selling it to someone, right. 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 payoff from selling a put option 668 to buy them. If the stock falls below the strike price at expiration, the option expires worthless. Therefore, a call option has unlimited upside potential, but limited downside.Put Option PayoffA put option is the right, but not the obligation, to sell an asset at a prespecified price on, or before, a prespecified date in the future. The payoff diagram of a put option looks like a mirror image of the call option (along the Y axis).

If the stock is above the strike at.




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Payoff from selling a put option 668