What is a put option buy


What is a put option buy


Shat article needs additional optiin for verification. s Please help ix this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2015) ( Learn how and when to remove this template message)In finance, a put or put option is a stock market device which gives the owner of a put the right, but not the obligation, to sell an asset (the underlying), at a specified price (the strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).

For the employee incentive, see Employee stock option. The strike price may be buj by reference to the spot lut (market price) of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium. The buyer of a put option believes the underlying asset will drop below the exercise price before the expiration date. The exercise price is the price id underlying asset must reach for the put option contract to hold value.

The underlying asset can be a commodity such as gold what is a put option buy right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (the strike price) during a specified period of time. For stock options, the amount is usually 100 shares.

Each option has a buyer, called the holder, and a seller, known as the writer. If the option contract is exercised, the writer is responsible for fulfilling the terms of the contract by delivering the shares to the appropriate party. In the case of a security that cannot be delivered such as an index, the contract is settled in cash. For the holder, the potential loss is limited to the price iis to acquire the option. When an option is not exercised, it expires. No shares change hands and the money spent to purchase the option is lost.

For the buyer, the upside is unlimited. The StrategyA short put spread obligates you to buy the stock what is a put option buy strike price B if the option is assigned but gives you the right to sell stock at strike price A.A short put spread is an alternative to the short put. Traders use options to speculate, which is a pu risky practice, while hedgers use options to reduce the risk of holding an asset.




Is put option a buy what

Is put option a buy what

What is a put option buy



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