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Questions tagged [puts]

The tag has no usage guidance.

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0answers
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PV of exercise price in put-call parity

We have put-call parity [value of call] + [PV of exercise price] = [value of put] + [share price] so, if we want to sell stock short, we have -[share price] = [value of put] - [value of call] - [...
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2answers
45 views

Getting puts though calls

From put-call parity we know how to get put options if they are not traded, i.e. value of put = value of call + PV of exercise price - share price According to that formula our actions would be: ...
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1answer
50 views

Why are my funds locked up in my trading account while using bear put strategy?

Today I used a bear put strategy and I was surprised to see that some funds in my trading account were locked up as margin used. It is well known that the potential loss in bear put strategy is ...
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1answer
66 views

Hedging a portfolio using Bull Call Spreads

I'm having some difficulty understanding how one would hedge a portfolio using bull call spreads as outlined in the following paragraph ( Today is also a good day to revisit my suggestion for a ...
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3answers
102 views

Options: Trying to close a naked call position after the underlying drops in value

I'm having some difficulty understanding how this sort of a trade example would play out. Some input would be very much appreciated! Let's say $FB is trading at $184 today. I write OTM naked ...
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3answers
83 views

Types of investments with built-in puts or similar safety features

I recently learned of indexed universal life insurance. One of the features of this type of investment is that a portion of the funds are used for puts, so the investment rarely (never?) loses money ...
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4answers
456 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 ...
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0answers
141 views

Question about margin and investing

Lets say I have $10,000 cash in an account and margin buying power of $20,000. I sell a put that is worth $9,000 and it gets exercised. Will I be using margin since i have enough cash in the account ...
3
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1answer
69 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 ...
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2answers
356 views

Why is a “long put” called long if you have a higher net position if the price decreases?

From Wikipedia: to be long in a security, means the holder of the position owns the security and will profit if the price of the security goes up The Payoff/Profit diagram shows that you earn ...
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1answer
122 views

Picking a hedge option

In picking a hedge option, how important is it to buy one where the implied volatility isn't much higher than actual market volatility? Should one look at the option chain and find those options ...