Buying Put Options Explained «FRESH - BREAKDOWN»

If the stock price falls below your strike price, your option becomes more valuable. You can either exercise the right to sell the stock at that higher strike price or simply sell the option itself for a profit. Why Buy Put Options? Investors generally use puts for two main reasons: 1. Hedging (Insurance)

The deadline. If the stock doesn't drop by this date, the option expires worthless. buying put options explained

Buying a put option gives you the right, but not the obligation, to sell a specific stock at a predetermined price (the strike price) before a certain date (the expiration). If the stock price falls below your strike

Limited to the premium paid. If the stock stays flat or goes up, you only lose the money you spent to buy the option. Investors generally use puts for two main reasons: 1

Stock XYZ stays at $100 or rises. Your option expires worthless. Your total loss is the $200 premium.

Substantial. Theoretically, a stock can go to zero, making your right to sell it at the strike price very valuable.