The Owner Of A Regular Exchange-Listed Call-Option On The Stock: Options Trading For Beginners – PUT Options Explained For Laymen

You are searching about The Owner Of A Regular Exchange-Listed Call-Option On The Stock:, today we will share with you article about The Owner Of A Regular Exchange-Listed Call-Option On The Stock: was compiled and edited by our team from many sources on the internet. Hope this article on the topic The Owner Of A Regular Exchange-Listed Call-Option On The Stock: is useful to you.

Options Trading For Beginners – PUT Options Explained For Laymen

PUTs

Purchasing a PUT option on a stock gives the buyer the Option (But not the obligation) to sell a set stock at a set price until a set date.

Puts can be used as insurance against the price of stock you hold falling in price. If you bought some shares on a stock and they went up in price by purchasing a put option on the stock at the new price you have in effect locked in the price rise of the shares.

Options for laymen

I believe the analogy of a house purchase is one of the best ways to explain how an option works so I will use that basic premise here.

The cash values are only for simplification and this will obviously work for different options and stock prices.

Case Study: Buying a Put Option on a house

We have a house that is currently selling for $100,000.

We think the house prices may fall but do not want to sell the house this month, we approach a purchaser with a Contract (proposal).

Our Contract states that we will give the purchaser $1000 dollars for the option (the right but not the obligation) to sell the house at the list price of $100,000.

The contract is valid for 30 days and if we do not sell the house within that period the purchaser will keep the $1000 and there is no further commitment on either of our behalf.

We have in fact purchased the equivalent of a one month Put option on the property.

The contract is valid for 30 days and if we do not sell the house within that period the purchaser will keep the $1000 and there is no further commitment on either of our behalf.

We have in fact purchased the equivalent of a one month Put option on the property.

o If the housing market soars (in the next 30 days) and the house is now valued at $110,000 we let our option expire worthless and we can sell the house for $110,000.

$110,000 (Current Value) – $1000 (Option Price) – $100,000 (Initial Price) = $9000 (Our Profits).

o If the housing market crashes (in the next 30 days) and the house is now valued at $90,000 we can exercise our option and sell the house for $100,000.

$100,000 (Sale Price) – $1000 (Option Price) – $90,000 (Current Value) = $9000 (Our locked in value).

Contract Sizes

On the Australian Stock Exchange a standard Put Contract usually covers one thousand underlying shares (some contracts have odd numbers so be aware of the quantity of the underlying stock the option contract covers).

On the New York Stock Exchange a standard Put contract usually covers one hundred underlying shares.

Video about The Owner Of A Regular Exchange-Listed Call-Option On The Stock:

You can see more content about The Owner Of A Regular Exchange-Listed Call-Option On The Stock: on our youtube channel: Click Here

Question about The Owner Of A Regular Exchange-Listed Call-Option On The Stock:

If you have any questions about The Owner Of A Regular Exchange-Listed Call-Option On The Stock:, please let us know, all your questions or suggestions will help us improve in the following articles!

The article The Owner Of A Regular Exchange-Listed Call-Option On The Stock: was compiled by me and my team from many sources. If you find the article The Owner Of A Regular Exchange-Listed Call-Option On The Stock: helpful to you, please support the team Like or Share!

Rate Articles The Owner Of A Regular Exchange-Listed Call-Option On The Stock:

Rate: 4-5 stars
Ratings: 9910
Views: 21953264

Search keywords The Owner Of A Regular Exchange-Listed Call-Option On The Stock:

The Owner Of A Regular Exchange-Listed Call-Option On The Stock:
way The Owner Of A Regular Exchange-Listed Call-Option On The Stock:
tutorial The Owner Of A Regular Exchange-Listed Call-Option On The Stock:
The Owner Of A Regular Exchange-Listed Call-Option On The Stock: free
#Options #Trading #Beginners #PUT #Options #Explained #Laymen

Source: https://ezinearticles.com/?Options-Trading-For-Beginners—PUT-Options-Explained-For-Laymen&id=3390093

Related Posts

default-image-feature

The Make-To-Stock Process Is A Pull-Based Approach True False Money Management, Part 2

You are searching about The Make-To-Stock Process Is A Pull-Based Approach True False, today we will share with you article about The Make-To-Stock Process Is A Pull-Based…

default-image-feature

The Main Source Of Paid-In-Capital Is From Issuing Stock The Google Story – An Inspiring Journey in Time

You are searching about The Main Source Of Paid-In-Capital Is From Issuing Stock, today we will share with you article about The Main Source Of Paid-In-Capital Is…

default-image-feature

The Main Source Of Paid-In Capital Is From Issuing Stock. Cyprus: Capital Gains and Immovable Property Taxation

You are searching about The Main Source Of Paid-In Capital Is From Issuing Stock., today we will share with you article about The Main Source Of Paid-In…

default-image-feature

The Main Source Of Paid-In Capital Is From Issuing Stock Floatation of a Company and Prospectus

You are searching about The Main Source Of Paid-In Capital Is From Issuing Stock, today we will share with you article about The Main Source Of Paid-In…

default-image-feature

The Long-Term Expected Return & Standard Deviation For U.S Stocks Extra Profits: The Magic of Purchase Discounts

You are searching about The Long-Term Expected Return & Standard Deviation For U.S Stocks, today we will share with you article about The Long-Term Expected Return &…

default-image-feature

The Issuance Of Common Stock Affects Only Paid-In Capital Accounts Tax Avoidance and Tax Evasion Explained and Exemplified

You are searching about The Issuance Of Common Stock Affects Only Paid-In Capital Accounts, today we will share with you article about The Issuance Of Common Stock…