A study on call_and_put_options

Jun 28th, 2015
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A. T. Still University
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Explanation Option traders use Put option contracts to benefit in a fall of the underlying share price. Options trade at a discounted price to the share. Therefore, instead of Short Selling the full value of the shares, you can benefit in a fall in price using less exposure of capital. Stock investors also use Put option contracts as a means to Protect their stock positions. This is because the Put option gives the buyer (taker) the right to sell their shares at the strike price.

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Page 1 of 9StrategyAnalysis OptionsLongPutAction:BuyingaPut optionExpectation: Stock/MarketwillbeBearishProfit:Unlimitedonstockprice/marketfallingLoss:Limitedtoamountinvestedintoposition(premium)Breakeven:StrikepricepremiumIndexLongPut ........................................................................................................................................................... 1Explanation ................................................................................................................................................... 2Benefits......................................................................................................................................................... 2Risks ............................................................................................................................................................. 2Howto ..................................................................................................................................................... 3Tips&Hints.................................................................................................................................................. 3PayoffDiagram LongPut ........................................................................................................................... 4PutStrikePricesATM

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