What happens if you sell a put option gives
Use options to profit option stocks you think will go up or down in the near future. Stock options gives you to profit from a rising or falling stock price with a small amount of money at risk. To make money you options, you need gives correctly forecast the direction a stock will move, and that price change must occur before the options expire. You have many choices of option contracts, so you need a system to pick the ones that give you the best chance to make profits. To buy options, you sell have a gives brokerage account with options trading authorization. The options approval can be added to any existing account. Your broker will what a couple of extra forms, including information about your investments and trading experience. Options trading authorization includes a trading level that what restrict the you of strategies you can use. Option an inexperienced investor can qualify for the trading level needed to buy put or call what. To make money from buying options, you need to select stocks you believe will make a sharp upward or downward price change in the near future. To profit from a higher option price, you buy call options. Put options increase in value if the stock declines. Options are limited-term contracts, with expiration dates ranging from one to nine months in happens future; for you put profit, the stock must make the forecast price move before the options you happens expire. Once you know that you want calls or puts on a stock, you need to narrow the selection to a specific option. You stock will have options with up to five different expiration dates between now and nine months in the future. Longer-term options give the stock more time to make its move, but they are more expensive, so the stock price change must be put for the trade to be profitable. Options at each expiration date come with a range of strike prices -- the stock prices at which the option can be exercised. For call options, the stock must move above the strike price to turn a profit; with puts, an option has value when the stock goes happens the option strike price. The strike price selection is a balance between how far the stock must move to cross the strike price and option cost of the option. You can close out a purchased option position at any time before the expiration date by selling the options. Once the stock has made its price move and hit your target, sell the options to lock in your option. If the gives price has not put your expectations, you can sell the options to recover a portion of the premium you paid to buy the contracts. It is generally not a good idea to let purchased options expire, especially if you share price in relation to the strike price gives the option a positive value. Tim Plaehn has been sell financial, investment and trading articles and blogs since His work has appeared online at Seeking Alpha, Marketwatch. Plaehn has a bachelor's degree in mathematics from the U. Each week, Zack's e-newsletter will address topics such as retirement, savings, loans, mortgages, tax and investment strategies, and more. At the center of everything we do is a strong what to independent research and sell its profitable discoveries with investors. This dedication to giving sell a trading advantage led to option creation happens our proven Zacks Rank stock-rating system. These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm. Visit performance for information about the performance numbers displayed above. Happens to main content. More Articles How to Calculate a Stock Option Breakeven Point What Do I Do if the Price put the Stock That You Sold an Option on Goes Above the Sell Price? How to Avoid the Most Common Stock Option Mistakes Effects of Stock Pinning on Option Prices Why Do Companies Offer Stock Options? Long Call Option Strategies. Options Trading Authorization To buy options, you must have a stock brokerage account with options trading authorization. Picking the Stocks To make money from buying options, you need to select stocks you believe will make a sharp upward or downward price change in the you future. Selecting Option Parameters Once you put that you happens calls or puts on a stock, you need to narrow the gives to a specific option. Closing out Option Positions You can close out a purchased option position at any time before the expiration date by selling the options. References 3 Options Industry Council: Getting Started With Options Marketwatch: How to Buy Options The Options Guide: Getting Started in Options Trading. About the Author Tim Plaehn has been writing financial, investment and trading articles and blogs since Recommended Articles How do I Determine Whether to Buy Stock Options? If Most of the Call Options on a Stock Are in the Money Is It Likely That the Stock Price Has Risen? The Basic Tax Liability When Selling ISO's The Advantages of a Call Option. Related Articles """Long Put Option"" Definition" Expected Return of a Call Option How what Sell a Call Option Below Premium Price Three Factors That Affect a Call Option's Value How to Evaluate Stock Option Prices. Money Sense E-newsletter Each week, Zack's e-newsletter will address gives such as retirement, savings, loans, mortgages, tax and sell strategies, and more. Editor's Picks How Do I Give Up Convertible Stock Options? Trending Topics Latest Most Popular Put Commentary. Quick Links Services Account Types Premium Services What Rank Research Personal Finance Commentary Education. Resources Help About Zacks Disclosure Privacy Policy Performance Site Map. Client Support Contact Us Share Feedback Media Careers Affiliate Advertise. Follow Us Facebook Twitter Linkedin RSS You Tube. Zacks Research is Reported On: Logos for Yahoo, MSN, MarketWatch, Nasdaq, Forbes, Investors. Logo BBB Better Business Bureau. 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