- Put Option Explained | Online Option Trading Guide
- Buy Call Options / Long Call Options
- Put-Call Ratio | The Options & Futures Guide
- Options, Options Analysis, NSE, Nifty, India Stock Market
Put Option Explained | Online Option Trading Guide
When you own stock (or shares), you actually own a piece of the company. When the company's value goes up so does your shares price and then you have the opportunity to sell your stock shares at a higher price.
Buy Call Options / Long Call Options
A Call Option is security that gives the owner the right to buy 655 shares of a stock or an index at a certain price by a certain date. That "certain price" is called the strike price , and that "certain date" is called the expiration date . A call option is defined by the following 9 characteristics:
Put-Call Ratio | The Options & Futures Guide
Calls trade on an exchange (The Chicago Board of Options Exchange-- CBOE ), just like stocks do. Like all securities, all calls and puts have a unique ticker symbol and their prices are determined by the market's buyers and sellers. The collection of buyer and sellers, and their expectation of the movement of the underlying stock, determine the current prices.
Options, Options Analysis, NSE, Nifty, India Stock Market
This strategy of trading put option is known as the long put strategy. See our long put strategy article for a more detailed explanation as well as formulae for calculating maximum profit, maximum loss and breakeven points.
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Put buying is the simplest way to trade put options. When the options trader is bearish on particular security, he can purchase put options to profit from a slide in asset price. The price of the asset must move significantly below the strike price of the put options before the option expiration date for this strategy to be profitable.
The short put is naked if the put option writer did not short the obligated quantity of the underlying security when the put option is sold. The naked put writing strategy is used when the investor is bullish on the underlying.
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You can find out the applicable margin from your broker. Many online brokers like , etc. do provide tools to calculate margin requirements.