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Questions tagged [put-options]

A put option is a contract giving the owner the right, but not the obligation, to sell–or sell short–a specified amount of an underlying security at a pre-determined price within a specified time frame. Related tags are [call-options, options, options-assignment, option-exercise and should be used when appropriate.

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Options for dummies. Can you explain how puts & calls work, simply?

I never understood Puts or Calls. Could anybody explain it like I were a child?
GUI Junkie's user avatar
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25 votes
7 answers
5k views

Better terms to use to understand Puts and Calls for options trading

I've been trying to learn a little about options trading, specially puts and calls. The term options works well for my brain because someone is buying or selling the option to buy or sell something. ...
End Antisemitic Hate's user avatar
16 votes
2 answers
2k views

How can put options be used to buy shares at a lower price?

How to use puts, if you are a net buyer of stocks? I read an article about Warren Buffett buying Burlington Northern stocks and how he used puts to lower the buying price of the shares. Please, ...
gyurisc's user avatar
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15 votes
4 answers
8k views

Who buys these significantly out-of-money options? [duplicate]

The following is the screenshot of the NIFTY 50 option chain. It is taken from the following link. Why are these people buying these significantly out-of-the-money options? In this case, it's the ...
Namit Sinha's user avatar
15 votes
3 answers
5k views

Why do speculators short-sell a stock when they wish to go short, rather than purchase put options?

I'm still trying to figure out, why, if a speculator believes a security will go down in value they use the traditional route of short-selling, when it would seem that purchasing put options is the ...
Terry Lennox's user avatar
12 votes
1 answer
3k views

Do companies sell puts when buying back shares?

Say company X has a share price of $80. They think their shares are undervalued, and their board approved a buyback of $1 billion. Can company X use the $1 billion to sell puts at $79, with the idea ...
Allure's user avatar
  • 2,730
9 votes
2 answers
6k views

Deep in the money put options

I'm trying to make sense of this option: Type: put Expiry: 2021-02-05 (= this week's Friday) Bid: 580.4 Ask: 584.9 Contract size: 100 Strike: 800 The underlying's last price is $225. Buying this put ...
thwd's user avatar
  • 215
9 votes
2 answers
4k views

Who provides the shares for exercising a put option?

I am trying to get into investing and have some questions about options. If I buy a put option (which would be an option to sell stocks as far as I understood), who will provide the stocks to sell if ...
Can't Tell's user avatar
9 votes
3 answers
9k views

How does one typically exit (close out) a large, in-the-money long put option position?

I'm long some puts on a stock that has dropped a great deal. I've made $400,000 on an investment of $100,000. The question is, how do I exit? I can't really sell the puts because there isn't enough ...
rsteckly's user avatar
  • 261
7 votes
3 answers
3k views

Am I understanding buying options on stock correctly?

I'm just wondering if I am understanding stock options correctly. Basically if I am watching stock XYZ. It's currently at $10 per share which I believe is low and should raise to 20 within 1 month. If ...
leeman24's user avatar
  • 436
7 votes
4 answers
7k views

Why won't my retirement account let me write a "covered put"?

My retirement account (a traditional IRA) will let me write a covered call, where I sell a call option if I have the underlying securities (for instance, 100 shares of IBM). The shares are required to ...
yhw42's user avatar
  • 797
7 votes
2 answers
594 views

What does this statement regarding put options mean?

I read an article in the NY Times, but I don't understand what this statement means: “The 16 puts on Cisco are offered at 71 cents. We should buy 1,000,” he says to a trader sitting across the desk, ...
user avatar
7 votes
4 answers
17k views

How do you calculate the rate of return (ROR) when buying and selling put options?

How do you calculate the rate of return (ROR) when buying and selling put options?
user avatar
6 votes
3 answers
1k views

Options for the intelligent but inexperienced

(Related to "Options for Dummies" and "What are some good options strategies...") I've been an investor in stocks for the past 14 years and have the confidence that I know what I'm doing. (Not that I ...
Jason S's user avatar
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6 votes
2 answers
1k views

Can a put option and call option be exercised for the same stock with different strike prices?

Refer to http://finance.yahoo.com/q/os?s=PEI&m=2011-10-21 If I were to sell a call @ 15 and sell a put @ 13, come October 21, is it possible for BOTH of the options sold to be exercised?
Shamoon's user avatar
  • 475
6 votes
1 answer
3k views

Options: Letting it expire or sell when profiting?

Do you let your options expire or would you sell it before you let it expire if you're profiting (meaning you're in the green - market is going towards the correct direction you anticipated). If you ...
hellomello's user avatar
6 votes
1 answer
27k views

How urgent is it to close put options when a company enters bankruptcy? How likely is it to have trading halted?

I own Jan-2020 put options on a company in bankruptcy, but the stock is trading between .25 and .50 and my limit orders to sell those puts are not getting filled yet. The trading on the shares has ...
iwan2know's user avatar
6 votes
1 answer
246 views

why some brokerage does not allow uncovered (cash secured) put via online order?

In past, I had brokerage accounts with Vanguard and I have option level approved for writing uncovered put( Level 4). I could place covered call orders via the website. But to place uncovered put ( ...
Ayush Agarwal's user avatar
6 votes
1 answer
6k views

How to record a written put option in double-entry accounting?

I have been using double-entry accounting to carefully track my financial situation for a couple of years now, but I am just dabbling with stock options for the first time. I wrote a put option (sold ...
Sean W.'s user avatar
  • 2,020
5 votes
4 answers
23k views

Buying puts without owning underlying

I'm looking to buy puts for short-term option trading. My time horizon is a week to two weeks at most. I only ever trade the options - I never hold to expiration. When I attempt to buy a put, I get an ...
Fueled By Coffee's user avatar
5 votes
2 answers
6k views

Can you buy an option and immediately exercise it? Options delays questions

Assuming American Options Can you buy a stock option and immediately exercise it - or are you only formally given control of the option at the end of the trading day? Would you be able to sell it ...
notmySOaccount's user avatar
5 votes
2 answers
345 views

Funneling money from a Traditional IRA to a Roth IRA using Options: Is my method possible and tax legal?

I'm new IRAs and I have both a traditional and Roth. My plan is to buy stocks in the IRA and buy protective puts in the Roth that guaranty a maximum risk of 5% or less across both accounts. I expect ...
Tim Santeford's user avatar
5 votes
3 answers
2k views

What happens to my put options on RSX expiring March 18 2022, if RSX remains halted then?

I bought put options on RSX (VanEck Russia ETF) that shall expire March 18 2022. How can I sell them now for profit? I don't want the underlying RSX shares. I just want to cash out on my gain! If ...
user avatar
5 votes
1 answer
1k views

What happens to SIVB put option holders?

As title implies - I own put options (Strike Price $125, exp. March 17 2023). I am wondering what happens to other owners of put options. As we all know now, SIVB is in receivership. I do not own ...
Nick's user avatar
  • 51
4 votes
8 answers
3k views

Is selling put options an advisable strategy for a retiree to generate stable income?

Suppose a retiree wants to generate stable income from selling S&P500 (or other stock index) put options. Is this an advisable strategy for a retiree?
curious's user avatar
  • 2,175
4 votes
3 answers
299 views

Can I profit from selling a PUT on BBY?

http://www.google.com/finance/option_chain?q=NYSE:BBY If I sell a Put at a $28 strike price, I'll earn $0.26/share (times 100 for one contract) = $26 today, correct? And as long as BBY doesn't drop ...
Shamoon's user avatar
  • 475
4 votes
2 answers
6k views

Put Option shown as negative value

I have a cash-secured $4 Put Sell @ $0.41 through Robinhood; decided to do a low expense introduction to options. When this contract was opened, I was credited the premium of $41 and had $400 set in ...
pstatix's user avatar
  • 353
4 votes
3 answers
260 views

Are buying puts valid portfolio protection?

Any article you read on buying puts for downside protection always walks through the optimal outcome. It goes like this: You buy cheap puts, the market declines before your puts expire and you have a ...
4thSpace's user avatar
  • 1,408
4 votes
2 answers
345 views

Can you write a put option without sufficient funds to meet the potential obligation?

When writing a put option does your account have to be funded so that if the buyer exercises the right to sell you can meet your obligation, or can you write the put option without the funds to meet ...
AFerrara's user avatar
  • 141
4 votes
2 answers
162 views

Option trading: High dollar value stock option and equity exposure

Probably an elementary question on options: If I trade options of a high dollar value stock, I will be exposed to higher equity as 1 option = 100 shares. Is there a way to reduce equity exposure? ...
bluetech's user avatar
  • 143
3 votes
2 answers
2k views

I have a put option affected by a dividend that has been renamed and no longer traded but is ITM

I have a put option affected by a dividend that has been renamed and no longer traded but is solidly in the money (MBI $8 puts). It appears as worthless in my app. I am considering exercising it. I ...
Telfer D. Preston's user avatar
3 votes
3 answers
2k views

Options strategy - When stocks go opposite of your purchase?

I'm a bit new to options and would like to ask for someone's strategy opinion. Lets say that you buy a call at an expiration date 2 months or so from now, and in a few days you see the stock go flat ...
hellomello's user avatar
3 votes
3 answers
4k views

Do stock option prices predicate the underlying stock's movement?

I am trying to understand if my thinking is correct or not. I am looking at a stock that is @ $10.00. When I look at the options on the stock $11, $12... calls are all down today and $11, $12... ...
kacalapy's user avatar
  • 417
3 votes
2 answers
260 views

ITM Options that are already profitable including the premium

Note: I am new to options and not very experienced. There are generally no free meals in life, and in the stock market, if something is too good to be true, it is. I have researched this question ...
Taidgh Mullins's user avatar
3 votes
4 answers
551 views

Trying to get my head around how options work

A stock X is trading at $215. I bought a put at a strike price $195 for $2.55 premium(paid $255) expiring June 7. Today the stock is down by $15 to $200. However, the price of my put is reduced from $...
john 's user avatar
  • 207
3 votes
1 answer
198 views

What is a bull put spread?

When someone in the stock market says they are going to do a bull put spread, what does that mean, and what services do they use to do it?
Kirk Ouimet's user avatar
  • 1,858
3 votes
3 answers
533 views

Starting with options trading

I am a regular trader with stocks but I am a complete beginner with options. I am referring to a few online resources like here and here However, I have a few questions. Say I call a stock at $50 ...
john 's user avatar
  • 207
3 votes
5 answers
22k views

How do you go about exercising a put option with less than 100 shares?

I've 50 shares of a company and I'm wanting to leverage that with a put option (Buy to Open, with the expectation share price might drop). When the prices is right and I want to exercise the option(...
user3826642's user avatar
3 votes
3 answers
2k views

How to Hedge delta and gamma of a put option simultaneously?

Say you took a short put position of 100 options (as you feel the option is undervalued). This put has a Delta of -0.5, so to make the portfolio delta-neutral you short 50 shares of the underlying ...
Nick aa's user avatar
  • 31
3 votes
4 answers
998 views

Comparison between buying a stock and selling a naked put

Suppose one wants to invest in company X, whose stock is selling for, say, $100/share. What are the differences in profit potential between buying 100 shares and repeatedly selling a naked put at ...
RussAbbott's user avatar
3 votes
1 answer
108 views

For an individual brokerage account user, what is the cheapest way to take a short position in a stock?

As far as I know, if I want to sell short, say, $100 worth of stock I need to post $150 in cash collateral and pay some fees each day. Another way is to buy a put option. In that case, I need to pay ...
James's user avatar
  • 157
3 votes
3 answers
767 views

Options "Collar" strategy vs regular Profit/Loss stops

I just found out about the option "collar" strategy which is implemented with a long put and a short call. My understanding is that a collar limits the profit as well as the loss on the underlying ...
pavel_karoukin's user avatar
3 votes
3 answers
355 views

When a near term outlook on an asset is negative, is it possible to make money using both put and call options?

This question is about Put options. These contracts give the buyer the right to sell some underlying asset at some agreed strike price at or before (American style contract) the expiration date. Call ...
SherlockEinstein's user avatar
3 votes
3 answers
1k views

Exercise a put option when shorting is not possible

Sometimes when I want to short a stock, my broker says that no shares are available for borrowing. In this situation, can I buy a put and exercise it immediately and end up with a short position? in ...
Victor123's user avatar
  • 16k
3 votes
1 answer
505 views

Explaining equity being analogous to a call option and bonds being equivalent to a short put

I read this: Equity in a corporation is essentially a call option on the enterprise value (the sum of all the firm’s assets) with a strike price equal to the firm’s debt. The firm’s bonds are a risk-...
MegaZeroX's user avatar
  • 143
3 votes
1 answer
983 views

Put Option Payoff Replication (Dynamic Hedging)

We know that we can use the below equation in the link to replicate the payoff of a call option using stocks and bonds. I am wondering what the equation would look like for a put option instead. In ...
Birtan's user avatar
  • 41
3 votes
2 answers
4k views

What is the face value of sovereign and Britannia gold coins?

I have seen claims on the internet saying sovereigns have face value of £1 and £100. These coins therefore have an embedded put option at the strike being the face value.
SMeznaric's user avatar
  • 798
3 votes
1 answer
129 views

Short position with bullish outlook

I am just starting to learn about options and about puts and calls. Traditionally, I assumed that being short on a position means having a bearish outlook to the market. However, when you are an ...
thispatchofsky's user avatar
3 votes
1 answer
147 views

ITM long put resolution after expiration

I'd like to understand how the following scenario is handled. I'm using Interactive Brokers and its cash account and I'm talking about US stock options. I don't take into account transaction fees and ...
pavelsaman's user avatar
3 votes
3 answers
355 views

How options affect the index?

I am not able to get technical/logical reason behind following scenario. Can you please help me to explain the reason behind it? Context: Group of stocks makes the index. It means Index is dependent ...
Harshal Sakare's user avatar

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