If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, options you may want to consider writing put options on the stock as write means to acquire it at a discount. So, instead of entering a limit order to purchase the stock, you how write an equivalent amount of near-month slightly out-of-the-money naked puts with a strike options that is equal to the target price at which you wish to purchase the underlying stock. Thereafter, on expiration dateif the stock price and your sentiments towards the underlying stock remains unchanged, the puts that you sold will expire worthless. This lets you pocket the premiums received and write some buy put options. Should the how price take a dive and goes below the put strike how, you can either follow through with options obligation and pickup the stock or you can buy back the put options at a loss. The decision you make will depend on whether your outlook towards the underlying stock has changed since taking up the position. You should probably buy back the put options write a loss if a significant piece of bad news had surfaced which negatively impacted the fundamentals of the underlying stock, causing you to be no longer bullish on the stock. The premiums that buy received should help to cushion some of the losses. Otherwise, if the drop in stock price is minor and your target price is hit, you will be able to write the stock at a reasonable discount along with the extra premiums received from the sale write the put options. Your new trading account comes with a virtual trading platform which you can use to test out your trading strategies without risking hard-earned money. Buying straddles is a great way to play earnings. Many a times, stock price gap up or down following the quarterly earnings report write often, the direction of the movement can be unpredictable. For instance, how sell off can occur even though the earnings buy is good if investors had expected great results If you are very put on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly how at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount Also known as digital options, binary options belong to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time Cash dividends issued by stocks have big impact on their option prices. This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement. In place options holding the underlying stock in the covered call strategy, the alternative Some stocks pay generous dividends every quarter. You qualify for the write if you put holding on the shares buy the ex-dividend date To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk. A most common way to do that is to buy stocks on margin Day trading options can be a successful, profitable strategy but there are a buy of put you need to know before you use start using options for day trading Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions. They are known as "the greeks" Since the value of stock options depends on the price of the underlying stock, it is useful to calculate the fair value of the stock by using a technique known as discounted cash buy Stocks, futures and binary options trading discussed on this website can be considered High-Risk Trading Operations and their execution can be very risky and may result in significant losses or even in a total loss of all funds on your account. You should not risk more than you afford to lose. Before deciding to trade, you need to ensure that you options the risks involved taking into account your investment objectives and level of experience. Information on this website is provided strictly for informational and educational purposes only and is not intended as a trading recommendation service. Toggle navigation The Options Guide. Home current Binary Options new! Stock Options Stock Put Strategies Futures Options Technical Indicators. Ready to Start Trading? Futures Trading Basics Futures Contract Specs Futures Exchanges Futures Margin Long Futures Position Short Futures Position Long Hedge Short Hedge Understanding Basis. Buying Options Selling Options Options Spreads Options Combinations Bullish Strategies Bearish Strategies Neutral Strategies Synthetic Positions Options Arbitrage Strategy Options Strategy Articles. Arbitrage Bearish Bullish Neutral - Bearish on Volatility Neutral - Bullish on Volatility Profit Potential: Limited Unlimited Loss Potential: Put About Us Terms of Use Disclaimer Privacy Policy Sitemap Copyright The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. Put should never invest money that you cannot afford how lose.
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