Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2015) ( Learn how and when to remove this template message)In finance, a put or put option is a stock market device which gives the owner of a put the right, but not the obligation, to prrice an asset (the underlying), at a specified price ;ut strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).
The strike price may be set by reference to the spot price (market price) of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium.The strike price is a key variable in a derivatives contract between two parties. In a call option, the strike price is the price at which the option holder can purchase the underlying security.
The option expires in six months. The term is mostly used to describe stock and index options in which strike prices are fixed in the contract. There are two main types of derivative products: calls and puts. Options put option strike price premium inc use terms that are unique to options markets. Understanding what terms like Strike Price, Exercise Price, and Expiration Date mean is crucial if you trade options. While put options are most commonly regarded as bearish trading vehicles, experienced option metatrader range charts key can also combine puts with other types of contracts to construct a number of different bearish, bullish, and directionally neutral trading strategies.In a plain-vanilla optiin, however, a bearish trader will buy to open a put option(s) on a stock he or she expects to decline during the life span of the option.
An option premium is received up front and the investor now has the obligation to buy shares of that security at the strike price, if the underlying is trading below the strike price at expiration. The investor will generally need to have the capital on hold in their account to fulfill the obligation of the sold put.This is a neutral to bullish strategy. You should only sell puts against stocks they opyion not mind owning in their trading account.