Options Explained - Buying Put

Stock XYZ drops to $80. You can sell at $95. Your profit is $13 per share ($15 gain minus the $2 premium).

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) 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). Stock XYZ drops to $80

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

The price at which you can sell the stock.