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Buy the right put option, meaning the correct strike price and the correct expiration date and if the stock goes down, you make money.
Options Weekly has some great write ups on trading options.
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Explain carefully the difference between writing a put option and buying a call option?
When you write a put option, you are player banker to someone betting that the price of a stock is going up. You receive the "bet" in the form of the options premium earned form the person buying the put options from you. If the stock fails to exceed the strike price of the put options by expiration, the buyer has lost the bet and you keep the "bet" money as profit. In this case, your profit is limited to the "bet" money or options premium you received for selling the put options. When you buy a call option, you are buying the right to buy a stock at a fixed price until expiration. If you buy a call option with strike price of $10 and the stock subsequently went up to $50, you can still buy the stock at $10 and then sell it for $50, making the $40 difference as profit. In this case, your profit is only limited to how high the stock rises.
What are the advantages of put option?
Put options has a few very significant advantages and one of the most direct of these is the ability for you to BUY the DROP of a stock. Put options gain in price as the underlying stock DROPS! Yes, with put options, there will be no need for shorting stocks in order to profit from a drop in price of a stock.Selling put options lets you play banker to people who are betting on the price of a stock going downwards. If they are wrong, you get to keep the "bet money". This allows you to profit when the stock goes upwards OR simply stayed sideways!See the link below for more details on put options.
How do you invest in call and put options to make good return?
The easiest way to profit from options is to buy call options when you think the underlying stock is going to go up and buy put options when you think the underlying stock is going to go down. However, that is only the most basic way of trading options. There are literally hundreds of different combinations known as "Options Strategies" that you can use to make very good profit in options trading. In fact, using some of these options strategies, you could even profit no matter if the stock goes up, down or sideways! No prediction needed. Check out the list of options strategies in the recommended link below.
What is exercising a stock option?
Exercising options is done by the option buyer. If the buyer exercises a put, he is selling to the option writer the stock. If a call is being exercised, he is buying the stock from the writer.
Reason to short a stock?
Well, you sell a stock short when you believe the price of the security will drop then you can buy it back at a lower price then you bought it for. You can also short a stock by buying "put" options.
Where can you buy compound stock?
"If it sounds too good to be true, it probably is". Compound stock is not any particular stock, but a system of buying 'put' and 'call' options that is supposed to earn fantastic amounts with no risk.
What is 'put' trading?
Put trading means trading put options. Put options are options that are derived from stocks and it allows you to always sell the stock at the strike price before expiration no matter what price the stock is in future. As such, put options are bought when you expect the underlying stock to go DOWN.
How do I specifically make 1000 quickly in the stock market with just an input of 200?
Buying options is really the only way. Find a stock or ETF or index that will move up significantly and buy a call, or one that will move down significantly and buy a put. Sell the option after the move.
Differentiate between call option and put option information?
Call options give you the right to buy a stock at a specific fixed price no matter how high the stock rises to in future. Traders normally buy call options when they expect the stock to rise. Put options give you the right to SELL a stock at a specific fixed price no matter how low the stock drops to in future. As such, traders normally buy put options when they expect the stock to fall. Read the links below for more details.
What would be a simple options strategy using a put and a call to exploit your conviction about the stock prices future movement?
Using a put AND a call at the same time? That's a hedge. If we could use a put OR a call to exploit your convictions, try this: If you think the price of a stock is going to go down, buy a naked put. If the stock goes down enough for you to make money after paying the premium, you call your broker and order the option be exercised, at which point they will buy stock for you, deliver it and collect the payoff. They will put the profit from the deal in your account. If you think the price is going to go up, buy a call. If the stock goes up enough for you to make a profit, call the broker and exercise then immediately sell.
Sell put options on all stocks in a recession?
Are you trying to hedge your portfolio or buy stock cheap? If you're trying to hedge, you buy puts, not sell them. If you've got a stock you really don't want to hold if it goes below $20 and it's heading down, buy a put at $20 and your problem will go away at $19.95. If it turns around, you're not out much. Think of a covered put here as an insurance policy. Buying stock cheap is done by selling puts. If you are convinced that a stock will be good after the recession ends, you'd sell puts and profit from the misery of others. ---- The holder of a put option has the right to sell a stock at a certain price. So the holder makes money of they can buy the stock at a price lower than the strike price for the put option. So if you want to make money from puts in market where the stock prices are headed south, then you buy put options. There are two types of options. One can be exercised at any time before it expires. The other can be exercised only on a certain date (european). Obviously the option values are different depending on which one you are going for.
What is put and call in Nifty?
Put options refers to an option of selling stock at a specific price on or before a certain date, similar to that of insurance policies. While, Call options are options to buy stock at a specified price on or before a certain date, similar to security deposits.
