To Buy And Sell Put Options — How

A put option is a financial contract that gives the buyer the , but not the obligation, to sell 100 shares of an underlying asset at a specific strike price on or before a set expiration date .

: Traders buy puts if they believe a stock’s price will drop significantly. This provides greater leverage than short-selling and caps potential losses at the initial premium paid. how to buy and sell put options

: A put is ITM if the stock price is below the strike price. A put option is a financial contract that

: Investors holding a stock may buy a put as "insurance." If the stock price plummets, the put allows them to sell at the higher strike price, limiting their downside. Risk and Reward : Max Profit : Occurs if the stock price falls to zero ( Max Loss : Limited to the premium paid. III. Selling Put Options: Income and Strategic Acquisition Put Option: What It Is, How It Works, and How to Trade : A put is ITM if the stock price is below the strike price

Buying a put (long put) is a strategy. Investors use it for two primary reasons: