What Is Put Option in Share Market?
A Put is an option contract between two parties wherein one party gives you the right to sell but not the obligation to a specified amount of underlying assets at a predetermined date at a specific price. Put Options are traded on various underlying asset, which can be stocks, Currencies, bonds, futures, Indexes, etc. Those who buy the put option are betting that the asset price will fall.
How does it Work?
When the stock price is below the strike price before the expiration period, the owner of put options has a profit. When underlying assets or securities price decrease, that time put option is more valuable. Vice versa, the Put option loses its value when the underlying asset or securities price increases.
How to buy and sell put options?
When you buy a put option, you’re guaranteed not to lose more than the premium you paid to accept that option. Investors buy Put options as a type of Insurance to protect other investments.
Buying or selling a put option requires investors to input the option they want, including many variables correctly. There are dozens of different choices for any option security, and you need to know which one you want to buy or sell.
For a profit, investors can also engage in selling business options instead of buying options. Once puts have been sold to a buyer, the seller must buy the underlying stock or asset at the strike price if the option is exercised. The stock price must remain the same or increase above the strike price for the put seller to make a profit.
How does it work?
When the stock price is below the strike price before the expiration period, the owner of put options has a profit. When underlying assets or securities price decrease, that time put option is more valuable. Vice versa, the Put option loses its value when the underlying asset or securities price increases.
How to buy and sell put options?
When you buy a put option, you’re guaranteed not to lose more than the premium you paid to accept that option. Investors buy Put options as a type of Insurance to protect other investments.
Buying or selling a put option requires investors to input the option they want, including many variables correctly. There are dozens of choices for any option security, and you need to know which one you want to buy or sell.
Investors can also sell business options instead of buying options for a profit. Once puts have been sold to a buyer, the seller must buy the underlying stock or asset at the strike price if the option is exercised. The stock price must remain the same or increase above the strike price for the put seller to make a profit.
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