How to Make Money with Put Options
When the stock market is in a downturn you can still profit. You can use put options to make money when a stock is declining in value. This article provides you with the basics of put options.
Before you can make money with put options you need to know the basics. Each put
option represents the right to sell 100 shares of a stock at a certain price for a certain
period of time.
The Underlying Security
The Underlying Security is the stock upon which the put option is based on. For
example, if you have 1 put option on XYZ Corporation you have the right to sell 100
shares of XYZ Corporation at a certain price for a certain period of time.
The Strike Price
The strike price is the price that your option gives you the right to sell the underlying
security at. For example, if the strike price is $25 you have the right to sell 100 shares of
XYZ Corporation at $25 for a certain period of time.
The Expiry Date
The expiry date is the date on which your right to sell the stock will end. For example, if
the expiry date is November, you have the right to sell 100 shares of XYZ Corporation at
$25 until the third Friday of November
.
