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 Topic Thread:

Put options




Put options:

Put option writer thinks the market will go up
Put option buyer thinks the market will go down

If you are nervous about market buy a put option.

Put options enable you to lock in a selling price (good for volatile stocks)

A put option buyer is someone who owns the stock and wants to protect long position in stock. Offset some of the potential loss (like buying insurance for the short term).  These put option buyers are conservative investors.

Put option buyers can also be speculators.  It is less risky then shorting the stock because they limit their potential loss

Call option buyer – speculation and leverage
Call option writer - hedging

Naked calls are risky – you can loose more than you can make because of the potential for unlimited loss.

If you buy a put you think stock price will go down.

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