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7

"Long" here does not mean you wish for the underlying stock to increase in value, in fact, as the chart shows, just the opposite is true. "Long means you bought the derivative, and you own the option. The guy that sold it to you is at your mercy, he is short the put, and it's your decision to put the stock to him should it fall in value. The value of the ...


5

You need to interpret "security" appropriately in Wikipedia's definition. You should think of it as saying: to be long in a put, means the holder of the position owns the put and will profit if the price of the put goes up And what makes the price of the put go up? -- the price of the underlying stock going down.


4

An index annuity is almost the same as Indexed Universal Life, except the equity-index annuity is an investment with a guaranteed minimum return, with sometimes a higher return that is a function of the gain in the stock market, but is not associated with a life insurance policy. After a time, you can convert the EIA to a lifetime income (the annuity part) ...


3

What if no one is selling $200, Dec 21, $FB calls. Everyone has a price - the bid/ask spread might be very wide but if there is an ask then someone is willing to sell. If you put in a market order, then you will be matched up with the current low ask price. If you put in a limit buy order, then your limit will be the bid and you'll be matched up with the ...


3

Shorting basically means you sell to open a position and you buy back to close the position. Writing options is to sell to open so you are correct that you are shorting the position. As put options are bought when you are bearish about the underlying, then yes you are correct by writing or shorting the put option you would be bullish about the underlying.


2

I sell a put for a strike price at the market. The stock rises $50 over the next couple months. I've gotten the premium, but lost the rest of the potential gain, yet had the downside risk the whole time. There's no free lunch. Edit - you can use a BS (Black-Scholes) calculator to create your own back testing. The calculator shows a 1% interest rate, 2% ...


2

You purchased a $5 strike put. Basically betting the stock would drop to lower than $5. The stock ends its life at a value of $19/sh. Your put expires early, worthless.


2

Selling stock short means borrowing stocks from a lender who owns the shares (broker is intermediary), selling them and returning the shares to the owner at a later date. The stock has a borrow rate which can vary from a fraction of a percent to as several hundred percent or more (today, TLRY has a borrow rate of 790% at my broker). That borrow fee is ...


2

When you write a naked 12/21 $200 call, you receive a credit for $9. It will not be a profit until 12/21 with FB trading below $200 and your call expires worthless. If FB trades higher between now and 12/21 then it's possible that the call may increase in value and you will be carrying a paper loss. If FB has dropped to $100 on 12/01, your call will be ...


1

Variations of this question have been asked before. In these links, I've explained many of the ways to hedge equity positions: How could I calculate the probability of getting wiped out? Profiting from an economic bubble collapse How should a portfolio be managed in preparation for a financial crisis?


1

There are 6 basic synthetic positions relating to combinations of put options, call options and their underlying stock in accordance to the Synthetic Triangle: Synthetic Long Stock = Long Call + Short Put Synthetic Short Stock = Short Call + Long Put Synthetic Long Call = Long Stock + Long Put Synthetic Short Call = Short Stock + Short Put Synthetic Short ...


1

Let's ignore the explanation that someone provided you because it is FUBAR. SQQQ is a triple leverage inverse ETF on the NASDAQ 100. That means that theoretically, the ETF should rise three times as fast as the NAZ drops but in reality, actual results may vary plus or minus the 3X expectation. As an example, when the NAZ dropped 9.8% in early February, ...


1

I now have $900 in profit. No, you have $900 in cash, and $900 in liabilities. Your net profit at this point is zero, minus broker fees. 1) What if no one is selling $200, Dec 21, $FB calls. You can probably find someone if you're willing to pay enough. If there really is no one willing to sell, you have other options (no pun intended). You could cover ...


1

Why do all this work yourself? Pay a modest price to have a professional do this for you. Look at the tickers PUTX, PUTW.


1

It really depends on who you broker with and how they operate. Consider that you probably use Robinhood, E-trade, or TD Ameritrade because you account value is not that high, I would venture out and say they would use your cash first. Generally speaking, it is better for them to use up your cash first because it means that they don't have to waste their ...


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